There has been a lot of hoopla about the 694-page housing act signed by the President July 30. There has also been a lot of mis-information regarding the potential for a $7,500 credit for first time home buyers—-This is not a cash back scenario, no one will take money off the top of your home purchase.
Rather, through the home-buyer tax credit, buyers who are purchasing for the first time or who haven’t owned a property in the last three years can now qualify for a tax credit equal to 10% of their home purchase price, up to $7,500. The purchase must be made between April 9, 2008 and July 1, 2009. The credit phases out if the buyer’s income exceeds $75,000 for an individual or $150,000 for a couple filing jointly and it must be paid back over a 15 year period in equal installments. The credit can be claimed on the buyer’s 2008 tax return even if the purchase is made in 2009 (it’s important to note that this is a tax credit and not a tax deduction).
So, it’s not as exciting as it may have seemed in the media. On the plus side, FHA loan limits will once again be going up, possibly increasing the jumbo limit from $417,000 to $625,000 for Columbus Homes (Someone please tell me if I’m not reading this correctly).