Tax Credit Available For First Time Home Buyers

Amid the economic upheaval, there is excellent news for first-time home buyers – a tax credit of up to ,500. Even better – the definition of first-time home buyers includes those who have not owned a principal residence in the three year period prior to purchasing a qualifying home.

The tax credit, established through the Housing and Economic Recovery Act of 2008, is available only to first-time home buyers and only for homes bought on or before April 9, 2008 and before July 1, 2009. Any home that will be used as a principal residence qualifies, including single family detached homes, townhomes, condominiums, mobile homes, and houseboats. New construction is also eligible, as long as possession or occupancy occurs within the parameters defined by the law.

For the purposes of this law, a first-time home buyer is defined as someone who has not owned a principal residence during the three years prior to the buy of the qualified property. For married taxpayers, neither individual may have owned a principal residence in the previous years. A buyer will not be disqualified from the tax credit if they own a trip home or rental property not used as their principal residence.

Single taxpayers with incomes up to ,000 and married couples with incomes up to 0,000 qualify for the full tax credit. Eligibility is determined based on modified adjusted yucky income. Partial credit may be available for those with higher incomes; but, individuals with a modified adjusted yucky income exceeding ,000, (or 0,000 for married couples filing jointly), will be ineligible for the tax credit.

The tax credit is equal to 10% of the qualified home buy price, but is capped at ,500; for homes bought for less than ,000, the credit will be 10% of the buy price.
There are no special forms to fill out and no pre-approval necessary. The credit is easily claimed on the centralized income tax return. Plus, the credit can be claimed on the 2008 return for a home bought in 2009. If the tax credit exceeds the taxpayer’s outstanding liability for the year, the taxpayer will receive a check from the regime.

The credit is like an interest-free loan, and it must be repaid to the regime over a 15-year period. Payments do not have to start until two years after the credit is claimed. If the home is sold before the credit is repaid, the outstanding amount will be paid from profits on the sale. If there is insufficient profit to repay the credit, the remaining amount will be forgiven.

For first-time home buyers (those who are truly new to the market and those who have not owned a principal residence in at least three years), this tax credit can make it simpler to transition into home ownership. Combined with housing inventories increasing, prices decreasing, and finance rates dropping even lower, this tax credit may just make the difference in making home ownership a reality.

This article is informative only, based on information available at time of periodical, and is not intended to provide tax or legal advice. Please be sure to consult with a tax advisor or legal professional about your particular situation prior to making any decisions or taking any action.

Once you start house hunting there is no doubt one of your first stops will be at a new homes website or community to see what they have to offer in the area you want to live in. In fact, new homes have stepped up to win the hearts and minds of homebuyers for the better part of the past decade where we’ve seen an unprecedented explosion in new home construction and buying. What was once considered a luxury reserved for the rich and well-known, new construction has opened the door to all price ranges and styles including luxury high-rise condominiums, townhouses, active adult communities and single-family homes.

There are a tremendous number of benefits to owning a new home including the ability to customize the home to your liking, meeting all the new neighbors as they go in and substantial savings in utility costs with new homes now being built to a higher, more energy efficient and green ordinary.

It’s your house. No, REALLY your house. – When you buy a resale home you are purchasing a home that someone else crafted to suit his or her lifestyle. Sometimes it’s just perfect and exactly what you are looking for but more often than not there are a few “Why did they do that?” issues with a home that you will have to renovate or remove when you go in to fit your lifestyle. When you build a new home you will be able to choose exactly what you want and where you want it so you can go in and not have to touch a thing.

Everyone else is new too! – Resale communities are fantastic because you can see the neighborhood, how people care for their homes and everything is already established but those same benefits can prove to be cons when you are the only new national on the block. Moving into a new home grants you the privilege of meeting the neighbors when they are also looking to meet new people and settle into the community. There won’t be any pre-established social circles to work your way into and you will be learning new things about your neighborhood at the same time everyone else does.

Newer homes are more attractive when you resell. – Life happens. You might have to relocate or you make a lifestyle change a couple small years after you go in. The excellent news is that newer homes are more attractive to prospective homebuyers because it’s their chance to buy a newer home without the price premium associated with new construction. Better yet, you’ve already bought all the appliances and upgrades for the home and many parts of the home are still under warranty making the home a fantastic inclusive value. This will compare favorably to older resale homes that may require renovation or updating to make it livable for the modern homebuyer.

Location, Location, Location! YOU choose! – When you shop for resale homes the homes you find are obviously fixed to their current location. How many times have you seen a fantastic resale that would be absolutely perfect if it were a small closer to the community clubhouse or offered a larger back yard for the kids to play? New homebuilders typically offer a range of model homes to choose from and you can ordinarily place that model on a lot of your choice. Now you can have the home of your dreams in the cul-de-sac you’ve always dreamed of!

In the current market new homes may be a better deal than resale homes. – That’s right, the market shift has turned the tables. Now buyers have the market in the palm of their hands and can get some really outstanding deals on homes but you have to know where to look. Resale home owners may be willing to deal but in the past thirty days I have been able to successfully negotiate $69,117 off the asking price of a new home for a client and then shortly after located a home for another client and negotiated $91,000 off the asking price and we are still in negotiations to get even more from the builder. By the way, these home prices included upgrades! I have never met homeowners who were willing to accept a substantial saving on the price of their home to the tune of more than $60,000. As a matter of fact, many homeowners have overpriced their homes on the market because they owe more than the home is worth and they cannot afford to go lower in price.

Buying Tip: To score a new home deal you can’t walk in and offer builders $400,000 under what they are asking for the home. Fantastic deals can be found but if you find the right buyer’s agent who specializes in new homes because their experience, relationships with builders and negotiating ability will help you save thousands of dollars.

That brown carpet and tiny kitchen? Soooooo 1970s! – Kitchen huge enough for one? Small closets, shower only bathrooms and carpet everywhere? Not for today’s homebuyer! The modern lifestyle is drastically different from what it was even ten years ago and resale homes often lack the oomph and space to satisfy. Today’s homebuyer wants a bright, open kitchen with breakfast bar and high-end appliances. We now do most of our living in the kitchen! Soaking tubs in the master suite and walk-in closets are now considered ordinary staples of the modern home. New homes often feature these amenities as a part of their ordinary donation and are even starting to prepare homes for the future including the addition of whole house networking and walk-out basements that can be finished as future living space.

New homes save money with efficiency and green building techniques. – Many new homes are taking advantage of the Energy Star ordinary which sets forth a number of requirements that products like windows and doors must adhere to in order to achieve an Energy Star rating. In addition to Energy Star many builders are now donation green building and living options like the installation of solar panels on the roof of a home to harness the sun’s energy and convert it to electricity. If you install enough solar panels you may just have the electric company paying you for the electricity you are producing! These features are often very costly to retrofit a resale home with if it wasn’t initially built to these standards.

The next time you start searching for homes be sure to consider all of your options including new construction. When buying new construction you should take into account the fact that most new homes take approximately four to six months to build. You will also devote more of your personal time to building the home as you will need to choose home upgrades and work with your agent through the inspection and financing processes.

Pleased hunting!