Since the signing of HR 3221 on July 30th, there has been much discussion of just what this bill means. Anytime we are dealing with an 800 page document written by politicians and attorneys, there is going to be confusion. Much of the language in the bill is vague and open to some degree of interpretation. Because of this, I have been looking to other mortgage industry experts and leaders for answers.
One of the most intrguing and discussed aspects of this bill is the First Time Home Buyer Tax Credit. This provision allows for First Time Home Buyers to receive a tax credit of upto $7,500 if they purchase a home from April 9, 2008 until July 1, 2009.
Below are two great resources that address Frequently Asked Questions regarding the tax credit.
http://www.federalhousingtaxcredit.com/faq.php
http://www.realtor.org/gapublic.nsf/files/hbtaxcreditqa2008.pdf/$FILE/hbtaxcreditqa2008.pdf
Both of these sources help explain just what a tax credit is and who is eligible. A couple of points of interest that I have not seen discussed previously:
1. There is no precedent and not much is known about just how the repayment of this tax credit will work.
2. If the financing is obtained by means of mortgage revenue bonds (i.e., through a tax-exempt bond-related financing program offered by a state housing agency), then the purchaser is not eligible for the tax credit.
As more information becomes available, I will be sure to share.
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