The 1st Time Home buyer's, $7500 - Tax Credit is offered under the Hope for Homeowners Program within the U.S. FORECLOSURE PREVENTION ACT OF 2008
Here are the basic details of the program:
1st Time Home buyer's can reduce as much as $7,500.00 off their IRS tax bills, although it must be repaid.
The federal government has created a way for 1st time home buyers to take advantage of a sluggish housing market. The have created a monitory inducement to get people off the bench. Hundreds of thousands of new buyers will be able to take advantage of this new tax incentive. You will be required to purchase a home on or before June 30th, 2009. The program started on April 9th, 2008.
The federal government has created a way to jump start the poor housing market so as to clear out the large amounts of unsold housing inventory.
Here are the specific details of the program:
1. If you have not purchased a home during the last 3 years or are considering buying a home for the 1st time before June 30th 2009, you may take advantage of the tax credit. You actual tax credit can be as much as $7,500 against your federal taxes for year 2008 or 2009. [$3750 if you are filing as a single person]
2. You are eligible to if you are not a current homeowner or have sold your previous home over 3 years ago and now rent. Close the purchase of a home before next June 30th, 2009 and you can claim a tax credit of up to 10% of the purchase price to a maximum of $7,500.
3. Understand, if your adjusted gross income exceeds $150,000 married couples or $75,000 for single people, the credit maximum begins to phase down.
4. The tax credit will not work in conjunction with any state or local housing agency's tax-exempt bond mortgage program.
5. There is a payback provision when benefiting from the tax credit. Unlike some past tax credits, this one must be repaid over an extended period. Starting in the 2nd year after the purchase and continuing for up to 15 years, the taxpayer(s) are expected to make pro-rata repayments to the government on their federal tax filings. The average cost over a 15 year period would be a $500 per year.
6. If you should sell your home before the end of the repayment period and you have not benefited from a gain on your home equity and sale, you won't be required to repay the remainder of the credit from the proceeds of the sale. Simply, put, the federal government is taking on all or much of the risk that the value of your home will not increase over time.
7. So, the new tax incentive works very much like an interest -free loan. You pay the principal back in increments over time but there's no interest charged to you.
8. This same program will not only benefit first time home buyers but will have a powerful effect on the general housing market, since, the buyers selling their homes to the 1st timers will purchase "move up" homes in the process. This will spur on the market to correct our current ills, faster.
Summary:
This federal tax incentive has been created to get 1st time home buyers into "housing" faster and will surely assist in a faster correction in the housing market. Further more, 100's of thousands of properties owners will be saved from being victims of a continued down turn in the foreclosure market, since; properties will be purchased by 1st time home buyers and move up buyers.
If you would like to get more information regarding the program, go to: http://www.7500taxcredit.net
The information contained in this document has been provided by:
Author: Steve Linnin
A Real Estate and Mortgage Broker for over 23 years. An educator and Trainer to loan officers and real estate agents.
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