Green Real Estate in Idaho

I’ve made several posts regarding the $8000.00 (eight thousand dollar) tax credit that is available to First Time Home Buyers, but the information came over several weeks and looking back it’s a little disjointed. After recent requests for a recap, I’m pulling it all together for a full review. It’s great information and while it may not pertain to every buyer, most people know someone who is considering their first home and I guarantee this will prove helpful.

First things first, you don’t have to be a first time home buyer to claim this credit, well sort of. If you are a previous home owner, but have not owned a home for 3 years, you may qualify for this credit. I would recommend that you consult your tax preparer if you may be borderline on this issue. An $8000 credit is great, but not worth getting into hot water with the IRS!

As of February when this FTHB tax credit was revised to $8000, it was also improved to be a true credit. One that does not have to be repaid. The only catch is that you must own this property and use it as your primary residence for at least 3 years. (Previously, the credit was $7500, and required annual $500 payments for 15 years, making it a $7500 loan for 15 years at 0%. Don’t worry too much about this, it’s over and done with now.)

The tax credit is equal to 10% of the purchase price, up to a maximum of $8000. If you’re purchasing a home that is $81,000 or more, you will get the full $8000 credit.

The window for taking advantage of this credit is very FINITE. Homes purchased between January 1, 2009 and December 1, 2009 qualify. The transaction must be closed within this window. Obviously there is a fair amount of time left in which first time buyers can get on board, but I highly recommend not getting down to the wire. It would be a shame to miss out on $8000 because you missed your closing by a few days.

Income limitations, of course, when aren’t there income limitations. Thankfully these are also quite generous. Single taxpayers with incomes up to $75,000 or married couples with incomes up to $150,000 qualify for the full credit. If you exceed this income limit you may qualify for a partial credit of less than $8000.

If you are a first time home buyer that purchased between April 9, 2008 and January 1, 2009 you may be eligible for the former tax credit mentioned above ($7500 credit/interest free loan). Information about this program is available here.

To review a pretty thorough rundown on the $8000 first time home buyer tax credit I think that this website, is pretty well put together. Of course, you’re always welcome to contact me via email, phone, sms text message, or messenger pigeon and I can help as well. Bottom line, if you have ever thought about owning a home, now is the time to make every effort to make that dream a reality. Prices are down, inventory is up, interest rates are down, and the government would like to hand you $8000 as a house warming gift.

Just past in the Senate is an ammendment to the pending stimulus bill.  As a quick aside… why don’t they call this a recovery bill?  After the debacle of the TARP/Stimulus you would think they would try to seperate them as much as possible.

Back to the matter at hand.  Sen. Johnny Isakson (R) Georgia introduced an ammendment to the bill that would convert the $7,500 First Time Home Buyer Tax Credit into a $15,000 (or 10% of purchase, whichever is less) credit for ANY home buyer purchasing a home to owner occupy.  What does this mean?  Well, a few things.  The $7,500 credit to first time home buyers is GREAT, but it is only open to first time buyers that have not owned a home in at least the last 3 years.  It also has to be paid back over 15 years ($500 per year due at tax time), but it is interest free.  The new amendment not only doubles the amount but it removes any recapture after 2 years of ownership.  While not clearly outlined in the article that I read, I would expect the same income limitations to be in place.  It also makes this credit available to any home buyer shopping for their personal residence, no investment property.  Upon further inspection it also appears that this credit could be claimed on 2008 taxes.

While this passed unanimously in the Senate it would still have to go back to the house after the modifications to the bill are complete for a vote.  Something this particular ammendment does not address is relief, restructuring, or some other form of assistance to home owners that are struggling to keep their homes.  While there seems to be new issues on the economic front every day to make things look a little more gloomy (job loss, consumer spending, credit markets) hopefully we can find enough little becons of light to get everyone through.

You can read an overview of the amendment over at USNews.

Are you a first time home buyer or do you happen to know someone that is considering the purchase of their first home?  If either are true would an extra $7500 help to secure that purchase?  Call or email me today and I can help.

The basics of the plan are as follows.  The government is making available $7,500 interest free, for first time home buyers (or anyone who has not owned a home for the past 3 years).  This money can be applied for prior to the purchase with your 2008 tax return using an additional, but easy to use form.  As with all things there requirements but they are quite manageable.

• The borrower can not make more than $75,000 ($150,000 if married filing jointly) to qualify for the maximum amount of $7500.
• Home purchase must fall between April 8, 2008 and July 1, 2009
• Did not own any other main home during 3 year period ending with date of purchase.

In times when cash can be hard to come by for down payments and associated out of pocket expenses this is a real boon to buyers that qualify.  If a home is not purchased prior to the July 1 deadline the money can be returned to Uncle Sam (no shopping sprees…).  There is a repayment plan in place that is extremely reasonable.  Repayment begins 2 years after the year in which you claimed the credit.  So, if you apply on your 2008 tax return, with your 2010 tax return you would include your first payment of $500.  You make payments annually for 15 years, at $500.  Yes, the math is correct, the buyer pays no interest charges.  The tax benefits of home ownership could well offset the repayment meaning that from a bottom line perspective, the $7,500 is “free money”.  Of course, because every person’s tax situation is different you should consult with your tax advisor.

This is money that could be in hand prior to your purchase.  Interest rates are very low, prices are down and there is a fantastic selection of homes on the market.  If you’re considering purchasing your first home this is the time to act.  Call me today so that we can put a plan in place to have you in your new home this Spring!

Ben Moore

208-373-1063