Ideas for Spending your $8,000 First-Time Buyer Tax Credit

BACKGROUND

In case you haven't heard, anyone who purchases their first home before December 1, 2009 will receive an $8,000 "tax credit."  Even if you don't pay that much in taxes, you'll still receive the $8,000.  If you're already getting a refund because too much was withheld by your employer or you estimated too much, you'll get your refund PLUS the $8,000.  No kidding!  It's literally a gift from the Federal Government, funded by the American Recovery and Reinvestment Act signed into law during February.

Someone who purchased their first home between April 1, 2008 and January 1, 2009 are eligible for (and may have already received) a $7500 "tax credit" that was inaccurately named - actually, it was a loan because it requires repayment over 15 years.  But it was an interest free loan, meaning payments won't exceed $500 year.  Not as good as the current tax credit, but still a good deal.  These ideas are for you, too.

SPENDING YOUR TAX REFUND

Question:  How can I spend my tax credit?
Answer:  Any way you want to...  There are no limitations.

Here are my top 20 suggestions for spending your first-time buyer tax credit (in no particular order):

1. Replenish the bank account or investments you liquidated for your down payment and/or closing costs.
2. Landscape your yard.
3. Build a deck or patio.
4. Purchase new appliances.
5. Update a bathroom.
6. Install new carpet or flooring.
7. Replace windows.
8. Buy new furniture.
9. Pay down your debts.
   
10. Invest in your future.
11. Take a trip.
12. Buy a used car.
13. Take some classes.
14. Go on a shopping spree.
15. Install a new roof on your house.
16. Put it towards a boat.
    
17. Replace your kitchen cabinets.
    
18. Upgrade your kitchen counter top.
    
19. Buy a big-screen TV and stereo equipment.
    
20. Save it for a rainy day.

Knowing that you have these funds coming to you in less than a year should give you the confidence to buy your first home, even if it is imperfect.  You won't have to wait years to save up money to begin making improvements to your home because you'll be receiving this "gift" during your first year. 

There are a lot of homebuyers in the market place that would love to have the same "gift," but only first-time homebuyers are eligible.  Don't let this opportunity pass by without purchasing a home while this $8,000 tax credit is in effect.

Read more about the $8,000 tax credit on CNNMoney.com

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Margaret Woda is a licensed Associate Broker in Crofton Maryland.  She specializes in serving the real estate needs of home owners and home buyers in Anne Arundel, Howard and Prince George's Counties, Maryland, including Fort Meade, Andrews AFB, and the U.S. Naval Academy.  If you enjoyed reading this post, check out Focus On Crofton and Your Online Relocation Package for Anne Arundel County.