First-Time Buyer Tax Credit

FIRST-TIME BUYER TAX CREDIT

The homeownership tax credit that the federal government created earlier this year is a hard-won tool at your disposal to encourage you buyers to jump off the fence and get into the home buying market. When you combine the tax credit with today's continuing low interest rates, large inventory and low prices, many of the pieces are in place for your buyers to purchase now.

The first-time Home Buyer Tax Credit was passed on July 30, 2008 as part of the Housing and Economic Recovery Act and targets any individual or household that has not owned a home for at least three years. Taxpayers can take the credit on their 2008 tax return if they bought their house this year after April 9^th.

The credit is worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if your buyers wait to purchase until the first half of 2009 they can take the credit on their 2009 tax return. The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10%, so your buyers can get 10% of the home price credited against their tax liability, up to a maximum of $7,500.

Income limits are $75,000 for individuals and $150,000 for households. Individuals whose income exceeds the $75,000 limit but is not more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000. Any house is eligible provided it is a primary residence located in the United States.

To help keep the program cost effective for taxpayers, the federal government requires the tax credit to be paid back in small, 6.67% increments over 15 years. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable.

There's one restriction on the type of financing that your buyers can use if they plan to take the credit. That restriction is on tax-exempt mortgage financing. That only applies if your clients are using below-market interest-rate financing from a public agency or nonprofit that's funding the loan using proceeds from a tax-exempt mortgage-revenue bond issue. For most buyers, this will not be an issue. It is mainly an issue for low-income buyers using special mortgage financing.

NAR continues to lobby Congress to remove the requirement that first-time home buyers repay the $7,500 tax credit and to expand the tax credit to apply not only to first-time buyers but to all buyers of a primary residence.

NAR is also lobbying Congress to expedite the process for short sales and banks' real estate owned (REOs) properties.

This article is based on information supplied by the National Association of REALTORS

Hello All,

I ran across this article and thought I would share with you. I printed out a few copies and have been handing them out to my first time home buyers. It seems to give them alot of info that they will need. I you all have a very MERRY CHRISTMAS & HAPPY NEW YEAR!!!