Economic Stimulus Package Reportedly Now Has an $8,000 Tax Credit for First-Time Homebuyers

So, it seems as if the homebuyer stimulus package that we’ve been tracking won’t be quite the Christmas in February that we were hoping for, but it’s still going to be great for first time buyers. Read the latest update here:

An $8000 First-Time Homebuyer Tax Credit has found its way into the economic stimulus package that was approved by Senate and House Representatives. Details of the tax credit within the newly agreed stimulus package have slowly been trickling out of Washington, but it appears that the tax credit won’t be quite as good as once hoped. The thought had been that a $15,000 tax credit to home buyers would be put into the stimulus package, but when the House and Senate came back with different numbers, a compromise had to be reached.

The $8,000 tax credit is just one part of the $789 billion stimulus package that should be on President Obama’s desk very soon to sign. It’s most likely going to help home buyers who purchase a house within the next few months, and early reports from the Associated Press do reveal some details, but not everything about what the tax credit will entail. Some of the details are probably still being fine-tuned as well, so there isn’t a 100% flow of information out of Washington just yet.

The details that have been released thus far are that the $8,000 homebuyer tax credit will apply to any first time homebuyers who purchase homes through July 31st. The start date for the tax credit hasn’t been released as of yet, so it could apply to either January 1st of 2009, or be set on the date that President Obama officially signs the stimulus bill. It looks like President Obama wants to have the bill signed by Monday at the latest, so it may have a February 16th start date for the tax credit, but potential homebuyers who are looking in on this may want to not make any decisions based on the date until it is set in stone.

The fact that this tax credit will only apply to first time homebuyers could serve as a stressor to those who were hoping it would apply to everyone buying a house. Additionally, with the tax credit d$8,000 Homebuyer Credit Lands in Economic Stimulus Package, Replaces $15,000 Creditropping from the original proposal of $15,000 down to $8,000 it also means it is a lot less of a “wind-fall” to people looking to buy a new house in this market. Income restrictions for the credit have not yet been released, but it will be interesting to see exactly what the regulations and stipulations of how this is paid back (or if it is) and exactly who qualifies for it.

Source: Washington Announcement

For questions or more information regarding buying in today’s Real Estate market, contact us today at kjpremier@atproperties.com.

Calling all First Time Buyers…”$7500 Tax Credit”

One of the big pieces of the housing rescue bill, passed and signed into law in July, was a $7,500 “tax credit” for first time home buyers.  We are blogging and keeping our eye on this bill because as it stands now those who take advantage of the “tax credit” have to pay the money back but, there is a chance that congress will vote to amend the stimulus package so that  the  recipients will not have to pay the money back.

First Time Homebuyer Tax Credit Qulifications:

• The home must be purchased as a primary residence.
• You must not have owned a primary residence in the last three years. For couples, both individuals must not have owned a primary residence in the last three years. Vacation homes and rental properties don’t affect this.
• Must not be a non-resident alien as defined by the IRS in Publication 519.
• Individuals must have a modified adjusted gross income of less than $75,000 annually and couples MAGI of less than $150,000 to qualify for the full amount.
• The phaseout range begins at $75,000 and ends at $95,000 for individuals, $150,000 and $170,000 respectively for couples.
• The home must be closed between April 9th, 2008 and July 1st, 2009.
• No mention of a credit score or history requirement

How the “tax credit” works:

• The tax credit is 10% of the home’s sale price with a maximum of $7500.
• You can claim the credit on taxes filed in 2008 or 2009.
• It’s a credit and not a deduction (difference between tax credit and tax deduction).
• “Tax credit” is a misnomer because it’s really a zero percent loan with some qualifications.

Tax Credit Loan Repayment Terms

The tax credit isn’t really a tax credit, it’s really just a tax free loan with some qualifications. You have to start paying back this loan within two years and you make equal payments over 15 years. When you sell your home, any profits will go first into paying off that loan. If you sell at a loss, the difference will be forgiven… meaning you will not owe any money on the loan (though it should be recorded as income as is typical with most loan forgiveness agreements, so you will owe taxes on it).money-picture

Keep checking back with KJ Premier…we are sure to keep you updated!  If congress passes the changes to the “tax credit” you can bet we will be yelling it from the roof tops!  A “good deal” would turn into a “GREAT deal.”