Reader's Digest of the Tax Incentive/Credit

Mortgage and Lending with Brand Mortgage Group

If you are in any way confused about the H.R. 3221 Bill that was passed and signed then you are certainly not alone.  But then I would challenge anyone, including (or maybe especially) the people who vote on and pass our legislation to completely understand ANY bill that is passed.  This particular bill is, as I understand it +/- 700 pages long.  How much of that do you think is in terminology created so only a heirogliphics expert could understand it, and how much do you think is actually in the English language?

But I ramble.  The only thing I can really see that will help our situation is the Tax Incentive/Credit for first time homebuyers.  Basically these are the guidelines;

  • Must purchase a home and close between April 9th, 2008 and July 1, 2009. 
  • Must not have owned a home for the previous three years
  • Income limits- Single or Head of Household- $75,000;  Married - $150,000; Single/HH with incomes between $75,000 and $95,000 are eligible for a "Partial Credit" and Married with incomes between $150,000 and $170,000 are eligible for a "Partial Credit" as well.  Anyone earning above these amounts for these categories is not eligible
  • A refundable credit means that if the taxpayer pays less in taxes than the $7500 they will get a check/refund from the government for the difference.  Examples:  If the taxpayer files and pays $1000 in taxes they will get a refund of $6500.  If they are due a rebate, say of $1000, they will get a check for $8500.
  • Buyers in 2008 must take the refund/credit on their 2008 returns, those buying in 2009 have the choice of taking it on their 2008 or 2009 returns.
  • It is, in essence, an interest free loan.  It has to be repaid.  It is repaid over a 15 year period at $500 per year.  If the home is sold in this time frame the balance must be paid out of the proceeds.  if there are not enough proceeds then the balance is forgiven.

That is it in a nutshell.  It is a good incentive.  There are many ways that it can be be utilized to promote sales.  The first time homebuyer can still use the government down payment assistance programs, in essence can recover what down payment they make, can look forward to having funds to buy furniture, do some remodeling, etc.  I certainly hope that it serves it's purpose and helps generate getting anyone who may have been sitting on the fence to move forward.

The first time homebuyer market is the one area that needs the stimulation to start a domino process.  There are many people who would love to move up but cannot sell their homes.  If the first time homebuyers get out there in force then the whole market will become better.

You can find out more about this bill on the NAHB's consumer website at

Hope this has been of some help.  As always your comments are greatly appreciated.  I would love to hear how you feel this will affect our business.

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