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First Time Home Buyer Tax Credit Expiring Soon

June 24th, 2009 · No Comments

unclesamIf you’re a first time home buyer and you’re a procrastinator like me, then you’ve been putting off buying a first time this year when interests rates have been the lowest in history, home prices are half of what they were a few years ago, and the government’s teasing you with an $8,000 tax credit.

Everyone’s saying it’s a good time to buy, but they were saying that during the boom in ’04 to ’06 and you know a bunch of people stuck in their house.

I can’t honestly say I’m a fortune teller but I’ve got this funny feeling it’s a good time to buy a house provided you plan on staying for at least 5 and preferably 10 years, you’re not going for an adjustable rate mortgage and stretching to make the monthly payments, and most of all, you’ll like what you can afford.

The American Recovery and Reinvestment Act of 2009 passed in February, but I really haven’t seen too many first time home buyers in the market until recently. It seems like there’s a lot of procrastinators out there, but the good news is there’s plenty of time and lots of great deals out there.

Keep in mind that you need give yourself enough time because you’re gonna be competing with all the other people who’ve procrastinated as well as the bottom feeder investors who are coming back in the market in droves.

A typical foreclosure home for sale will see multiple offers with many of them being cash, so you’ll lose out on a few before you actually get one. It’s a bummer, but a fact of the market at the moment.

Many of you will be going FHA financing which will require flooring, kitchen appliances, and door handles which are commonly missing from foreclosure properties.

One bit of advise that I can give is that there’s lots of great deals out there besides foreclosures and the label foreclosure doesn’t mean it’s a good deal.

Also remember that government is offering a tax credit and not a check. Here’s a few key points to remember:

Credit maximum was increased from $7,500 to $8,000. The credit is calculated as 10% of the
purchase price. Example: If the purchase price is $70,000, the credit is $7,000.

Removed the repayment requirement, provided the home buyer does not resell the home for three

Eligibility remains for first-time home buyers only. In this case, a first-time homebuyer is defined as
an individual who has not owned a primary home at any time during the three years prior to
purchase, but who may have done so prior to that time. Although certain income limits do apply, the
amount of the credit is the same for all taxpayers, married or single.

To be eligible for the full tax credit, the home buyer can have an annual adjusted gross income of no more than $75,000 ($150,000 on a joint return). A home buyer with an annual adjusted gross
income above that level, and up to $95,000 ($170,000 on a joint return), is eligible for a reduced tax

The refundable tax credit can be claimed on the purchase of one’s individual or joint tax return for any single-family home that closes between January 1, 2009 and November 30, 2009. It can be claimed on a 2008 tax return (to be filed by April 15, 2009), an amended 2008 tax return, or a 2009 tax return. Individuals should consult a professional tax adviser for specific details and restrictions on exact tax calculations and timing.

Like I said earlier, I’ve got this feelin it’s a good time buy a first home. If you feel it’s time, give yourself enough time by allowing for at least 3 months to find a home and don’t get bummed out when you get beaten out by some investors paying cash. It’s probably gonna happen and you just gotta find another one.

Tags: Real Estate Tips