Final score: $8,000 for homebuyers
First-time purchasers get a tax credit windfall if they buy before December.
Thinking of buying a new home in Menneapolis? Help is on the way from Uncle Sam. There's a nice windfall for some homebuyers in the economic stimulus bill that President Obama put into law in February. First-time buyers can claim a credit worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes.
A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of witholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision.
Many people are asking questions such as
Scenario 1:
Scenario 2:
Scenario 3:
To qualify for the credit, you must purchase a home between January 1, 2009 and November 30, 2009.
Now for the REALLY Good News
If you've NOT owned a home anytime within the PAST 3 YEARS, then you qualify for the $8,000 tax credit. When you purchase the home using Uncle Sam's $8,000, you must agree to live in the house for at least three years. Which means real estate investors have to give up the idea of buying a house with Uncle Sam's money and renting it out. Because if you get caught buying a house and then renting it or selling it before the 3 years, then Uncle Sam is going to insist you repay the credit back.
And there are some strings attached to Uncle Sam's $8,000 tax credit, too.
The Recession is Over. Really.
The recession actually ENDED about eight weeks ago. How can we tell? Because home sales were up 5.1% in March, 2009. Home sales climbed 6% in April and May is expected to show some better numbers too. In November 2008, home inventory was hovering about 11 months worth., As of May 10th 2009, home inventory was hovering around 6 months of inventory.
But you need to act now. Because the good times are not going to last very long when it comes to historic low interest rates like we have right now. Once homes fall to around four months of inventory, interest rates and home prices are simply going to start climbing again. So if you're thinking of buying a home, right now is your best chance to jump into the market with help from Uncle Sam and you should do it before prices start to climb again.
Prequalify Before You Buy.
You will need decent FICO scores (credit scores) to get into a home with a really great interest rate. Click here to contact me.
First-time purchasers get a tax credit windfall if they buy before December.
Thinking of buying a new home in Menneapolis? Help is on the way from Uncle Sam. There's a nice windfall for some homebuyers in the economic stimulus bill that President Obama put into law in February. First-time buyers can claim a credit worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes.
A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of witholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision.
Many people are asking questions such as
" As a qualified first time home buyer, does this mean if I purchase now I would get an extra $8,000 on top of my current refund? "The long answer, is three scenarios:
The short answer: YES. You will get back the $8,000 plus what you over paid in your taxes. If you don't buy a home, then Uncle Sam won't be giving you that $8,000 refund check, sorry.
Scenario 1:
Your final tax liability is normally $6,000. You've had taxes withheld from every paycheck by your employer and at the end of the year, you've paid Uncle Sam $6,000 in taxes. Since you already paid him what you owed, you get the entire $8,000 tax credit as a refund check. Wooooo-hoooooo!
Scenario 2:
Your tax liabilities were $6,000 but you underpaid Uncle Sam through your payroll withholding by $1,500. In this scenario, you'll get back $7,500.
Scenario 3:
Your tax liability was $6,000 but you've OVERPAID your taxes through your payroll withholding by $1,000. Normally, you'd be getting back a $1,000 refund check. But Uncle Sam will be writing you a check for $9,000.
To qualify for the credit, you must purchase a home between January 1, 2009 and November 30, 2009.
Now for the REALLY Good News
If you've NOT owned a home anytime within the PAST 3 YEARS, then you qualify for the $8,000 tax credit. When you purchase the home using Uncle Sam's $8,000, you must agree to live in the house for at least three years. Which means real estate investors have to give up the idea of buying a house with Uncle Sam's money and renting it out. Because if you get caught buying a house and then renting it or selling it before the 3 years, then Uncle Sam is going to insist you repay the credit back.
And there are some strings attached to Uncle Sam's $8,000 tax credit, too.
- To qualify, you must be making LESS than $75,000 if you are single.
- If you are married, then you must be making (jointly) less than $150,000 a year.
The Recession is Over. Really.
The recession actually ENDED about eight weeks ago. How can we tell? Because home sales were up 5.1% in March, 2009. Home sales climbed 6% in April and May is expected to show some better numbers too. In November 2008, home inventory was hovering about 11 months worth., As of May 10th 2009, home inventory was hovering around 6 months of inventory.
But you need to act now. Because the good times are not going to last very long when it comes to historic low interest rates like we have right now. Once homes fall to around four months of inventory, interest rates and home prices are simply going to start climbing again. So if you're thinking of buying a home, right now is your best chance to jump into the market with help from Uncle Sam and you should do it before prices start to climb again.
Prequalify Before You Buy.
You will need decent FICO scores (credit scores) to get into a home with a really great interest rate. Click here to contact me.
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