First Time Home Buyers Tax Credit
There is a huge buzz about the Obama Administration tax credit for first time home buyers, however, the good news is if you have not purchased a home in the last three years are in fact a first time homebuyer.
At the start of the talk, the original tax credit was going to be $15,000, however, after all the negotiating the tax credit is $8,000, which is still a good amount to help you purchase that new Las Vegas home.
Eligibility for the $8,000 Tax Credit
In order to receive the $8,000 tax credit you must be a first time buyer. The law explains a first time homebuyer is one that has not purchased a home three years prior to the purchase of the new home. If a couple is purchasing the home, the records of both spouses will be used to determine if they are first time buyers.
You must purchase the new home on or after January 1, 2009 and prior to December 1, 2009. The purchase date is defined as the date of the closing when the homeowners receive title to the property. The property purchased can be a new home or a resale home. The home must be the principal residence, meaning the homeowner must live in the home, it cannot be a vacation home, a rental property, or for resale purposes.
Type of Las Vegas Homes that qualify for the $8,000 tax credit
Any home that will be the principal residence of the homeowner including single family detached homes, attached homes such as condos or townhouses, manufactured homes, and houseboats.
Determining the Amount of the Tax Credit
The tax credit is determined by calculating 10% of the purchase price of the home up to $8,000.
Income Limits
The income limits are determined by a person or persons modified adjusted gross income. The MAGI is the total income for the year minus specific deductions prior to the figure you receive after the itemized deduction on personal exemptions or Schedule A. If you look at your Forms 1040 and 1040A, the adjusted gross income is the last figure you find on page 1 and 1st figure on page of the form. Take this figure and add such things as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs, this will be your MAGI.
The tax credit is reduced for homebuyer that has a MAGI of over $75,000 for singles and $150,000 for married filing a joint return. The tax credit is reduced to zero for those that have a MAGI of over $95,000 for singles or $170,000 for married. The rest of the individuals that fall somewhere in between will be reduced accordingly.
In some cases, if you are over the MAGI limit you may still qualify for a partial tax credit.
The Difference between the new $8,000 Tax Credit & the Tax Credit enacted in July of 2008
The major difference is that Obama Administration tax credit does not have to be repaid, as does the July 2008 tax credit, which is really an interest free loan.
If you need a further explanation of the Tax Credit for First Time Home Buyers program please contact the Realty ONE Group professionals at (702) 481-1889 for assistance.
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9 Comments to First Time Home Buyers Tax Credit
Comments
My understanding is that the the final guidelines for the $8,000 tax credit were issued on May 29, 2009. The real estate that I read says that the first-time home buyer must complete the purchase by November 1, 2009. The buyer must take out an FHA loan, and these loans require a minimum 3.5% down payment. But ten states have programs to provide bridge loans of up to 3% on top of the first mortgage, so there is a good chance for many home buyers to get 100% financing on home purchases for a limited time. My summary of this first-time home buyer program is at my San Diego real estate blog. But the guidelines can be read in full at the HUD website.
It’s crazy that you count as a first time buyer if you haven’t bought a house for 3 years. It doesn’t make any sense.
I take it this doesn’t count if you currently own a house and are selling it to buy a new one? If that was the case the vast majority of people would be “first time buyers”.
Hi,
It is the nice step taken by the Obama Administration. It should really help the people who thinks to buy a home .
I agree. Not only because it helps people who were thinking they couldn’t afford to buy a home right now, but also because it helps home sellers. People who may have been waiting months to sell their homes – since there are lots of homes for sale (or foreclosed!) and fewer home buyers (buyer’s market, right?) – those individuals can now have hope that their homes might actually sell. It helps get a sluggish real estate market moving again, and that is good for everybody.
Other efforts from the Federal Reserve Board are helping families, couples and individuals feel better about taking the financial steps needed to purchase a home. Revisions in mortgage disclosure, enacted in July, are set up to ensure greater transparency for consumers. Any new changes that come and are geared to protect consumers who need more information before closing on a mortgage loan can do nothing but help our country’s current stasis.
Interested in what others have to say about this.
-Dana
I don’t know if it is a good idea. The temptation of buying a home can attract people who can’t afford it,and lie on their application,like a lot of people did, and go into foreclosure. If you can’t afford to buy don’t buy. I see beyond Obama’s sugar coating…
In the UK you wouldn’t been seen as a first time buy like that. If you have ever bought a house then the credit history would help get another morguage as long as its a good rating.
The tax credit has been extended to may 2010 – I am so close to being able to get pre-approved just not quite there yet, hopefully I can make the deadline, get 8K and a new home to reside in
The term “first time home buyers” is definitely misleading. It may seem crazy as Terrance mentioned, but at least more people are qualified to avail of this tax credit. A great incentive and motivation for home buyers and sellers alike.
does Tax benefit also apply to Canadians?
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