Special offer

Sell More Homes this Month with First Time Homebuyer tax credit.

Mortgage and Lending

The first time homebuyer tax credit provides for the reduction of the income tax liability of the homebuyer on a dollar for dollar basis. The homebuyer must itemize all deductions, including income and exemptions for the tax year, among other things, to determine their tax liability. If you qualify for the $7,500 tax credit and your total tax liability for the tax year is $7,500, it becomes a wash and you owe nothing for that year. If the equivalent of $7,500 was deducted from your paycheck during the course of the year by your employer, then you should receive a tax refund of $7,500.

Please note that First time homebuyer tax credit is more like an interest-free loan that must be repaid over a period of 15 years.

Heather the Realtor Orlando, Lake Mary
LemonTree Realty - Orlando, FL
First Time Home Buyers, Bank Owned Homes

Yeah I think it's a bunch of bull if you ask me. If they give the credit up front to help with a down payment or osmething then it helps sell homes.

Nov 30, 2008 11:46 AM
Hans Iduma
Gaithersburg, MD
Certified Mortgage Planning Specialist

Orlando, what if part or all of their 3% downpayment has to be paid back to a relative, don't you think the $7,500 will go a long way in doing that? What if they used up their last savings to complete the transaction, could that be used to decorate the house or maybe set aside for their first payment?

Nov 30, 2008 11:56 AM
Steve Grandizio
Friendly Mortgage & Blueprint Commercial - Philadelphia, PA

Hans, you are 100% right.  It's a great tool, but only if realtors understand it well enough to educate their clients.  The fact of the matter is that, by changing the clients' witholdings, they can get the money in hand today to help with down payment assistance.  If they know that they are buying, they could have their payroll administrator withold zero from their check for a couple months to get the some, if not all of the money in their hand immediately.

Hans, keep up the great work.  I am a CMPS as well. 

Nov 30, 2008 12:00 PM
Brian P. Forrester
VanDyk Mortgage - Palm Harbor, FL


What if they use the money to pay down high interest credit card debt?  An interest free loan is better than a loan at 21% interest even if they have to pay it back!

Nov 30, 2008 11:03 PM
Hans Iduma
Gaithersburg, MD
Certified Mortgage Planning Specialist

Brian, you are absolutely correct. This is money they can choose to use any way they want, including investing it should the market start getting better.

Nov 30, 2008 11:20 PM
BJ Matson
The Choice Group - Olney, MD

Looks like the new ‘economic stimulus' bill will give an $8,000 credit.
Credit is no longer required to be repaid as long home is not sold within three years.

May 02, 2009 02:57 PM