There are a few things that we all should be aware of with the new $8,000 First Time Home Buyer Tax Credit. The $8,000 First Time Home Buyer Tax Credit program ends in just four months unless Congress extends the program. That means buyers need to purchase and close on their homes by November 30th in order to receive the tax break. Time is running out. While we may get lucky if our beloved politicians extend the program, you might not want to rely solely on their great judgment. If you wait around thinking that the program will be extended, you might be caught out in the cold.
The Home Buyers Tax Credit is a tax refund for 10% of a primary home’s purchase price (up to $8,000) if the home was purchase and closed on after January 1st, 2009 and before November 30th, 2009. The amount not used on your 2009 tax return will be refunded directly to you. To be eligible for the program, the government considers a first time home buyer as those people who have not owned a principal residence in the last three years.
There are income limits to the program that you need to be aware of. The full $8,000 tax credit is given to individuals who make up to $75,000 and married couples who make up to $150,000 per year (adjusted gross annual income). The credit amount phases out between $75,000 and $95,000 for individuals; $150,000 and $170,000 for couples filing a joint income tax return.
In many cases, you can use the First Time Home Buyers tax credit can be used as a portion of your down payment. Another great use of the tax credit is that it can provide the much needed cash to improve homes once new home owners move in. A lot of the homes being bought lately which are eligible for the tax credit have been foreclosed properties. Many of these need carpet, paint and so on to make them nice places to live. This is helping use the tax credit just as it was intended to help fuel local economies. If the tax credit is used as a down payment, the money will not make it to the local businesses that need a financial shot in the arm.
Personal finance radio host, Ilyce Glink, said on her blog recently, “I think we’d have to see real estate sales drop off completely, or watch the official unemployment rate go to 11 or 12 percent nationally before the federal government would push through another home buyer tax credit.”
Time is running out to cash in on your $8,000 tax credit. If you are sitting on the fence waiting to buy a new home, you might not want to wait too much longer. The program ends at the end of November.
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AFAIK, using the $8k as part of the downpayment requires you getting an FHA loan, and you can’t use it as part of the minimum required downpayment — it has to be used for additional downpayment or toward closing costs.
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