$8,000 First-time Homebuyer Credit: 6 Insider Tips
Overview
UPDATE: FEDERAL HOUSING TAX CREDIT
Everyone’s talking about the $8,000 home loan tax credit for first-time home buyers that’s part of the new $787 Billion Stimulus Plan. The intention of the credit is to encourage home sales to help stabilize housing prices, minimize foreclosures and help the economy. This is great news for the personal economies of first-time buyers! Check out these tips on how to take advantage of this aspect of President Obama’s housing bailout plan.
Tip #1:
Think Twice! You May Be a First-Time Home Buyer and Not Even Know It!
Are you a first time home buyer? Before you answer, consider this: for the purpose of this tax credit, a first-time home buyer is defined as someone who has not owned their primary residence in the past three years! Translation: thousands more people qualify for the tax credit than meet the eye.
And the “primary residence” distinction is also important to note: this means that people who rent their primary residence and also own an investment property or vacation home could also get the credit for becoming owners of their residence.
Tip #2:
Start Shopping Now! Make the Tax Credit Part of Your Personal Housing Bailout Strategy.
Let’s face it; few people need cash more than someone who has moved into their first new house! How can you pass up on an infusion of cash like this, courtesy of Uncle Sam?
But the truth is, it takes time to buy a home. These’s the hunting itself (the excess of houses on the market is on your side!), the negotiations with the seller, and then the process of underwriting your loan that can last weeks. It makes sense to get all your ducks in a row. You don’t want to wait until the deadline is looming and feel pressured into making decisions.
Make the most of your negotiating power and your time by getting pre-approved and get ahead of the curve. You don’t want to miss out on this tax credit by dragging your feet!
Tip #3:
Keep the Money! How the New Tax Credit is Different from Last Year’s $7,500 First Time Home Buyer Tax Incentive.
Last year’s tax credit for first-time home buyers was $7,500, so this year’s $8,000 credit will give you an additional $500 (or up to 10% of the purchase price of your home – whichever is less).
But the biggest difference between the two is that last year’s tax credit had to be paid back over the next 15 years – making it more of an interest-free loan. This year’s tax credit is exactly that, a credit. The $8,000 doesn’t have to be paid back – at any time!
(And yes, sadly it’s true that those who purchased their first home in 2008 under the provisions of the former $7,500 credit won’t qualify for the upgraded plan!)
Tip #4:
Check Your W2s! Make Sure Your Income Can Qualify for the $8,000 First-Time Home Buyer Home Loans Tax Credit.
Not all first-time home buyers are instantly qualified. Adjusted gross income for single taxpayers must be below $75,000, and below $150,000 for dual-income families filing jointly. But it’s not all-or-nothing in this case. There’s also a reduced credit for single filers up to $90,000 and joint filers up to $180,000.
It’s also worth noting that the new tax credit includes home loans financed with state and local tax-exempt mortgage-revenue-bond programs — unlike last year’s tax incentive.
Tip #5:
Don’t Wait for Your money! Cash-in on the Credit before Tax Season!
As mentioned before, who needs money more than someone who just purchased a home?
Some people bought houses in early 2009, before the April 15th tax deadline. The government made provisions so that first-time home buyers who bought their home after January 1, 2009 could cash in on the tax credit with their 2008 return. This provision also currently applies to those who filed extensions to their 2008 taxes – they, too, can redeem their tax credit when filing their 2008 return before the extension deadline expires.
But did you know it’s possible at any time to amend your taxes? This means anyone purchasing a home between the qualifying dates of Jan. 1 and Dec. 1 of 2009 can file an amended 2008 tax return and receive a check just weeks after filing! Check with your tax advisor about how to file an amended return, or check out the IRS’s site for more information!
Tip #6:
Boost Your Karma! Help the Economy With the $8,000 First-time Home Buyer Tax Credit!
Of course the government hopes that encouraging more home sales will boost the economy by minimizing foreclosures. There’s no telling to what extent the tax credit may help the economy, but the National Association of Realtors projects that 300,000 more houses will sell during 2009 as a direct result of the new $8,000 home loans credit.
Just think: buying your first home now will not only benefit your personal finances, but you can also have the satisfaction of knowing you’re helping the economy! Everyone wins, and you can sleep more soundly at night — in your new house!
It’s clear that if you’re considering buying a home, there’s no better time than now.
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With 11 years in the lending industry, Ted is proficient in structuring the client’s loan to ensure that the client obtains the best financing. He has become a recognized leader in real estate education and hosts real estate seminars for his clients and the business communities in the Southwest. His attention to the details and in-depth knowledge of the loan process ensures that you are getting the best service possible.
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