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TAX CREDIT FOR FIRST TIME HOME BUYERS

By
Mortgage and Lending with PrimeSource Mortgage

Tax Credit for First Time Home Buyers~

Congress just signed a new bill to stimulate the housing market by offering up to a $7500 credit on tax returns for home buyers who have not owned a home in 3 years!  This is a huge opportunity to allow home buyers a way to reimburse themselves for the expense of buying a home!  It is basically an interest free loan for 15 years....

 Here is how it works:

 •-        The new law authorizes a temporary $7500 tax credit for qualified first time home buyers for the purchase of any home.

 

•-        The firt time home buyer is defined as a buyer who has not owned a home during the past three years.

 

•-        The temporary tax credit is good for a home purchase on or after April 9, 2008 and before July, 2009!

 

•-        Buyers can take the tax credit in their 2008 or 2009 tax return.  If you purchased a home in 2008, the tax credit is taken on your 2008 return.  If you buy in 2009, you have the option of taking the credit on your 2008 or 2009 tax returns.

 

•-        Single taxpayers with adjusted gross incomes of up to $75000 are eligible to take the full credit.  For married borrowers filing a joint return, the income limit doubles to $150,000.

 

•-        Single taxpayers earning between $75,000 and $95,000 can claim a partial credit of less than $7500 while the phase-out for married couples ends for those earning above $170,000.

 

•-        Since the tax credit is refundable, it means that the home buyer can claime the credit even if they owe little or no federal income taxes.  In other words, the government would write you a check.

 

•-        For Example, if a home buyer owes the federal government $2500 in federal taxes and qualifies for the $7500 home buyer tax credit, the taxpayer would receive a $5000 refund check from the IRS.

 

•-        To reduce the cost to the Federal Treasury, Congress has mandated that the tax credit essentially serves as an interest-free loan to be repaid over 15 years.

 

•-        For example, a home buyer claiming a $7500 credit would repay the credit at $500 per year.  If the home owner sold the home, the remaining credit amount would be due from the profit on the sale of the home.  If there was insufficient profit, the remaining credit payback would be forgiven.

If you are considering purchasing a home or simply have questions, please feel free to email me at kcrowley@mbngmortgage.com, or call (918) 260-0342.  I am here to help!

Comments (9)

Dan Magstadt
Paramount Residential Mortgage Group, Inc - Lake City, FL

This is great information! It's definitely something I'll keep around for reference in the future!

DM

Aug 04, 2008 07:24 AM
Lewis Beynon
CENTURY 21 Triangle Group - Raleigh, NC
Lew B Realty

Can you clarify...........I called my accountant and he said it hasn't been signed into law yet.  However, a quick search on google and an article I found indicates it is real.

Signed, A Boomer Sooner in Albany, NY!!!

Aug 04, 2008 07:38 AM
Michael A. Caruso
Surterre Properties - Laguna Niguel, CA

Hi Karol,

Thanks for the thorough explanation.  This is very helpful.  Have a great week.  Michael A. Caruso

Aug 04, 2008 07:41 AM
Debbie Small
Long & Foster Realtors - Martinsburg, WV
REALTOR

Great breakdown on this but I do have one question. Am I correct in thinking that the $500 annual payback will be factored into the monthly payment?

Aug 04, 2008 07:58 AM
Eric Egeland
RE/MAX SUBURBAN - Libertyville, IL
SFR, e-PRO, CDPE

Thanks for the post Karol

You did a great job of explaining

Aug 04, 2008 08:04 AM
Karol Crowley
PrimeSource Mortgage - Tulsa, OK

Based on my information, it was signed into law last week.

The $500 annual payback will become a portion of taxes due at the end of each year.  In other words, any taxes due or refunded will be adjusted by that amount.

Aug 04, 2008 09:15 AM
Trey Affolter
Keller Williams Realty - Tacoma, WA
Brings HOME Results!

Karol,

Thanks for this information and for breaking it into bullet form. I have been away without news for a little over a week and am scrambling to catch up. This definitely helps.

 

Aug 04, 2008 11:02 AM
Anonymous
Sid

Quick question. I am getting married in Dec. So, if I buy a house now in Sept, will I still be eligible for the $7500? Is it married at the time of purchase or married at the time of filing the taxes?

Aug 26, 2008 02:50 AM
#8
Anonymous
Sid

Karol,

Just wanted to add taht my income is over 95k and so I would not be eligiible as a single. But after marriage our joint income will be less than 150k and so I will be eligible. Hence the question!!

Best,

Sid.

 

Aug 26, 2008 02:52 AM
#9