The economic stimulus plot place together by the Obama administration included many measures, one of which was a tax credit for first time homebuyers. In this provision the homebuyer would be able to claim as a tax credit the smaller amount of $8000 or 10% of the house value. The whole thought was to give vitality to the real estate markets and incentive for people to buy new homes before the beginning of December 2009. This is particularly excellent news for people who were already contemplating the buy of a new home, and especially in markets where home values are already at their lowest.
In July 2008 Congress passed a homebuyers tax credit, which was helpful to some, but required repayment. In effect it was an interest-free loan. This new tax credit does not need to be repaid. It acts as a grant rather than a loan.
Qualification as a first-time home buyer requires that the buyer has not owned a home for three years. This means that previous homeowners who sold their properties during the bubble may qualify as new home buyers under this stimulus scheme. It is also vital to note that one restriction on this tax credit prevents the buyer from receiving it if they buy a home from family: parents, grandparents, children, spouse or spouses family. Ownership of a rental property or vacation home that has not been used as a primary residence does not disqualify a buyer from being first-time for the purposes of this credit.
Be aware that income restrictions apply. For full credit individuals cannot make more than $75,000 a year and couples who file joint returns cannot make more than $150,000. But, income can exceed these amounts but the tax credit amount will be smaller than the $8000 or 10% of the homes value. Individuals are ineligible for this tax credit if their income reaches $95,000, as are couples (filing jointly) with income exceeding $170,000.
If they qualified, homebuyers were allowed by the IRS to file amended returns to claim this tax credit. The refund could be received in fewer than 12 weeks.
Even though this stimulus package was made to help the middle class buy homes during the economic downturns the country has seen, it does not help in making a wise home-investment choice. Homebuyers are encouraged to make a study of the market they are deliberating purchasing in, and especially whether the property they are considering has truly reached the bottom of its devaluation. If these issues have been diligently studied then the tax credit and loans that are available could help potential homebuyers in the hard decisions the current real estate markets present.
Wendy Polisi is the founder of Credit Repair College and Finance the Dream. Their video training is designed to allow consumers to take control of their financial future by learning the insider secrets of credit repair. For more information on credit repair, please visit them on the web. Finance the Dream helps people looking for a lease option take advantage of the $8,000 tax credit.