The National Housing and Economic Recovery Act of 2008 have put in to affect a first-time homebuyer tax credit, which is designed to prod those reluctant home-buyers into taking the plunge. It seems awesome, at first, then skeezy, then simply okay. At least, that’s how it was for me.
You see, at first, I thought the government was throwing money at you. Awesome. That’s not the case, unfortunately. A tax credit is something akin to a no-interest loan, only you don’t actually get the money; it’s just taken out of your taxes, and you eventually have to pay it back. The aim is to ease the financial burdens on a first time home-buyer, not to toss money at them (Insert sadface here).
How much is this for, you ask? $7,500. Technically, the credit is for 10% of the sale price of the house, but you can’t claim any more that $7,500. So, unless you can find a house for under $75,000, the credit is for $7,500.
So, who counts as a first-time home-buyer? If you have yet to own a house, it’s a pretty good bet you’re a first-time home-buyer. BUT! If you haven’t owned a house as a principal residence (you don’t live in it) for three years, YOU are a first-time home-buyer, as well! That means, if you owned a house four years ago, then moved to an apartment, you are qualified for this tax credit, as well! (Note: If you are married, the law tests homeownership history of your spouse, to. Unfortunately, if she has owned a home as a principal residence in the last three years, you cannot claim this credit, or even half, as in some other cases, detailed below.)
If you have a non-occupying homebuyer – a parent, for example – on the loan, you qualify for ½ the loan ($3,750). The non-occupying homebuyer is not eligible for the credit. If you’re buying a house with someone else, but aren’t married, you are both qualified for ½ the credit (or divided among however many people are purchasing and living in the home, assuming they all haven’t owned a home in the last three years.) And, if you and your spouse are filing taxes separately, you both are eligible for half the credit.
All of you – or just you – have to pay this back over fifteen years (beginning two years after the credit is claimed) at $500 a year, or when you sell the house. If you do sell the house, the money is simply taken out of the profits that you make. If the profits are insufficient, then the remaining credit is forgiven.
This is retroactive, meaning that if you purchased your home any time after April 9th, 2008, you are eligible, and any home (provided that it is to be used as the principal residence) qualifies for this credit, including townhouses and condominiums. This opportunity ends June 30th, 2009, though, so act now!
Somewhat of a drudge to read through, I know, but if you are a first-time home-buyer, this is actually a pretty good deal, and combined with the all-time low prices of homes and interest rates these days, it makes for a very good time to buy a home.
So, go ahead and buy a home!
We’ve got some really nice ones out there.
Like these two homes here -->
$132,000 each, or $245,000 for both sides!