First Time Home Buyers Credit

Well, the new first time home buyer’s tax incentive must be working.  With four pending sales (three of them for first time home buyers) people are paying attention.  A couple of things you should know;

  • A first time home buyer is someone described as a person who has not owned a home in the last three years.
  • In order to take advantage of the tax incentive you must own the home you will be buying for three years.
  • There are income restrictions.  I believe it’s $75,000 for single buyers and $150,000 for married couples.
  • The max tax credit allowable is 10% of the purchase price up to an $8,000 ceiling. 

So, if you KNOW you are going to buy your first home by the end of the year you can start by withholding less money for taxes and use that money you get in addition to your usual paycheck for savings/downpayment on your first home.  Of course, if you end up not buying a house by December 31st you’ll have to pay all that money back! 

Just sayin’….

4 Comments

Filed under Financing Options

4 responses to “First Time Home Buyers Credit

  1. Troy

    just to keep you honest Chris, the credit is 10% of purchase price with a ceiling of $8k…

    note with the terms offered by FHA these days, a first time buyer could get into a ~$230k home with “net” zero down…. or a less expensive home and actually get money back!

    through the scenario you suggested they could either save the 3.5% down pmt (~$8k for a ~$230k home) over the coming months through diminished payroll deductions, or front the 3.5%then recoup by the same method.

    an alternative scenario would be to front the down pmt then claim the credit on your ’08 tax return. or amended return for that matter. this allows for much quicker capital recovery.

    why is this only for first time homebuyers again? nuts.

  2. Your grammar is more correct. I’m going to edit that. I knew what I meant. 🙂 Great catch.

  3. I have a better idea to get jobs going in construction again. Why don’t they offer a small interest rate construction loan to Real Estate Investors? We would be able to borrow money for the bank (short term) to buy up these foreclosed properties. Due to the poor condition of these properties we then hire construction crews as electricians, plumbers and inspectors. Once the rehab is complete we either sell the property to a family or rent it out. Either way; many jobs are created.

    The government needs to take a look at what happened to these houses they gave to people? They are in poor condition due to people did not respect the property. However, if they don’t have their sweat and tears into the property. They can walk away and be out nothing.

    I work hard on maintaining my investment property to keep my property up to code and in rent ready condition. The issue is tenants don’t respect the property and these same group of people were put into houses and look what happened to the condition of these houses?

    Now, they are giving money to this group of people again?

  4. Pat

    If you are flirting with the 75,000 income limit, give to a regular IRA to get under 75,000 by April 15th.

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