This year, Congress passed a bill that gives a $7500 credit to first-time homebuyers. This credit is available if you closed on your home after April 9, 2008 and before July 1, 2009. Your income must be less than $95,000 if you are single and $170,000 if you are married to take advantage of the credit.
A first time homebuyer is someone who has not owned a home for three years. (Only in America can someone who has previously owned a home be declared a first time homebuyer.) The credit is taken on your 2008 or 2009 tax return and can be refunded - which means that if you bought a home and owe no federal income tax, the IRS will send you a check for $7500 (just because they are so wonderful).
Now for the alleged part…this is not really a tax credit. You have to pay it back over a fifteen-year period. That’s comes out to $500 per year. It’s a loan rather than a credit. The bonus is you do not have to pay any interest on it.
Should you take this money? Absolutely! You should think of it as your own personal bailout. You have $7500 in your pocket now and have 15 years to pay it back. If you put $7500 in the bank you will get a magnificent 0.5% interest on it - $35 in the first year - enough for a few cups of coffee. You can use this for anything you want, but the best use of this money is to pay down your mortgage.
More detailed information is available at
2/7/09 I had to update the link because the original link changed.
http://www.federalhousingtaxcredit.com/faq.php
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2 comments:
Thom, this is great, but I guess I bought my house two years to soon:-( Debi
length of ownership should also be considered with this credit - if you sell your house before the 15 years is up - you owe the remaining balance of the credit 'loan' on your tax return of the year you sold the house (only to the extent of gain reported on the house).
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