First-Time Home Buyer Tax Credit

There has been quite a bit of confusion around this part of the Stimulus bill.  Some people believe it is a credit, but in reality, it’s more like a no interest loan.  I’ve been able to get some details from my mortgage partners that will help clear up this part of the Stimulus bill.

In order to qualify for this Credit, you must not have owned a home in the last 3 years and you are a US Citizen that file taxes.

Your Income Limits, your Adjusted Gross Income (AGI) has to be less than $75,000 ($150,000 for married filing jointly) to qualify for the full $7,500, up to $95,000 ($170,000 for married filing jointly) to receive a partial credit.

The Effective Dates of this credit is to purchase a home on or ofter April 9, 2008 and before July 1, 2009.  The close date of your home must fall within this range.

The home must be your principal residence, which is a given since you are a first time home buyer.  But just in case you are planning on buying quite a bit of properties at once, only the one you live in will qualify for this credit.

There is a payback provision.  This is not a true credit, it is a non-interest loan that you will pay back over 15 years, about $500 per year.  If you sell the home before 15 years for a profit, then the balance will be taken from the profit.  If you see the home before the 15 years for a loss, then the balance is forgiven, you will not have to pay it back.

One more point about this tax credit it, it is refundable.  What does that mean?  Well if you owe taxes when you file, the credit will be applied to that, if you owe less than the credit, then you will get a check.  If you get a refund, then the credit will be added to your refund check. 

The bad news is that you won’t get the credit until you file your Federal Income Taxes, not when you buy the home.

Related posts:

1. First Time Home Buyer Mistakes
2. Lobbying is still going on…
3. HB 6694 – The Return of the DPAs
4. Thoughts on the ASU Affordability Index
5. FHA Underwriting Adjustments