BUY YOUR FIRST HOUSE BEFORE NOV. 30 AND GET $8000 TAX CREDIT
The U.S. Government has decided to stimulate the economy (namely the housing market) by giving first home buyers (including those who have not owned a house in three years) an $8000 tax credit. If you are anywhere close to the fence on buying a house, buy one! This $8,000 is free money!
The American Recovery and Reinvestment Act of 2009 authorizes this tax credit. The sole source of this article is http://www.federalhousingtaxcredit.com/2009/faq.php. Let’s look at the important qualifications for the tax credit. The tax credit is the lower of $8000 or ten percent of the sales price. A credit means that you can reduce your tax liability dollar for dollar; this will reduce your tax liability up to $8,000.00! If your modified adjusted gross income is less than $75,000 ($150,000 for married couple), you can get the whole credit. Unfortunately, if your Modified Adjusted Gross Income is more than $95,000 ($170,000 for married couple), you get no credit. If your income is between, it will be pro-rated. Consult your accountant to determine your Modified Adjusted Gross Income and see if he-she can reduce your income (legally) below the limit.
This tax credit need not be repaid. However, you must occupy the house as your principal residence for at least three years; otherwise, you face a re-capturing of the tax credit. You cannot buy a house from children, grandchildren etc. or parents, grandparents, etc. or your spouse. The tax credit is refundable. That is, if you owed less than $8,000 in federal taxes and you qualify for the credit, you get a check back from the government for the difference!
The closing must take place between January 1 and November 30 of 2009. If you bought a house, between April 1, 2008 and the end of 2008, you are eligible for a different tax credit and you need to speak to your tax advisor.
Consult your tax advisor and/or mortgage specialist for more information. House prices are relatively low. Interest rates are very low now, but will go up. Your buying power may never be better than it is now. Throw in the tax credit, the mortgage interest deduction and the time may never be better. If you have decent credit, 3-4% at least to put “down” and are confident that you will live in your area, for three years, you need to move fast. November 30 is coming fast. It takes 60-90 days to complete a closing in these mortgage days. If you wait too much long, it may be too late. Go, buy a house!