Can The New Home-Buyer Tax Credit Stimulate You To Buy Now?

Hey Peachtree City here are 4 ways to help stimulus new homeownership!
 
A refundable first-time homebuyer tax credit of up to $8,000 is the centerpiece of four housing incentives found in the 2009 American Recovery and Reinvestment Act. Experts predict homebuyers will purchase an additional 300,000 homes in 2009 as a result of the tax credit.  The impact will likely not be felt for at least 3 or 4 months, because it generally takes buyers that long to qualify for a mortgage and search for a home.

This year’s tax credit will certainly have a much bigger impact because it is a true tax credit which is also refundable. For instance, if you owe $1,000 in taxes and qualify for the first time homebuyers tax credit, you will receive a tax refund of $7,000.

Activity spurred by the new credit will help bring down housing inventory and stabilize prices.

Rules for 2009 first-time homebuyers tax credit

Does not have to be repaid unless the home is sold within three years.

Applies only to first-time homebuyers, defined as those who have not owned a home within the previous three tax years.

Available only for homes purchased between Jan. 1, 2009, and Dec. 1, 2009.

Restricted by income; phases out for individuals with an adjusted gross income of $75,000 or above and for married couples with a combined adjusted gross income of $150,000 or above.

Tax credit is for up to 10 percent of the purchase price, up to a maximum of $8,000. For example, a buyer of a $150,000 home could receive a tax credit of a maximum of $8,000, while a first-time buyer of a $70,000 home would be eligible for a tax credit of $7,000.

The credit can be taken on 2008 taxes even when the purchase is made in 2009.

The greatest part of this tax credit is that home-buyers can take the credit on their 2008 tax return even when they have purchased the home in 2009. This acts as an immediate stimulus for a lot of people.

Home-buyers can take advantage of this filing exception in one of three ways: closing on the home prior to April 15, 2009, getting an extension to file taxes later in the year or filing an amended return.

Some state housing programs are introducing programs that allow home-buyers to access the tax credit money at settlement. The National Association of Home Builders has launched a Web site with detailed information about the first-time home-buyers tax credit.

More affluent homeowners will not be able to take advantage of the new credit, which phases out for individuals with an adjusted gross income of $75,000 or above and for married couples with a combined adjusted gross income of $150,000 or above.

Other incentives

In addition to the first-time home-buyer tax credit, the stimulus legislation includes three more measures that could have a positive impact on homeowners, home-buyers and home sellers. Expansion of the home improvement tax credit. The tax credit for making energy-efficient home improvements has been raised to 30 percent of the cost of the improvements, up to a maximum of $1,500. Eligible improvements — which must meet the standards established by the federal government — include replacing doors and windows, adding insulation, and installing new heating and air conditioning systems and water heaters. The tax credit on home improvements works as a great incentive for homeowners who need to make energy-efficient improvements to their homes. The fact that these incentives are “credits” rather than “deductions” makes them even more appealing.

The maximum FHA loan limit for high-cost areas has been restored to the 2008 level of $729,750.
Stimulus legislation passed by Congress in the first half of 2008 temporarily raised the FHA loan cap from $362,790 to $729,750 in cities where housing is particularly expensive. However, the higher loan limit expired in January and was replaced by a lower loan limit of $625,000.

The stimulus package restores the 2008 limits through the rest of 2009. This will help keep a greater percentage of loans in expensive cities in the “conforming loan” category. Conforming loans are eligible for guarantees from mortgage giants Fannie Mae and Freddie Mac. Such guarantees help reduce mortgage rates on conforming loans. The guarantees also make it easier for first time and low-income borrowers to qualify for mortgage loans.