There is potential great news for first time home buyers. Last year congress passed a $7,500 tax credit, that was to be paid back over 15 years, so it was in effect an interest free loan. Yesterday, however, things got a whole lot sweeter for a first time home buyer.
Yesterday, the house passed an $819 billion dollar economic stimulus package which included the $7,500 dollar tax credit to first time homebuyers. Now however, rather than being a loan, it is a pure tax credit. In other words, buy your first house, and you get $7,500 paid to you by the government! For many first time home buyers this would be more than enough to cover closing costs depending on the size of the home.
To qualify for this great deal, here are some guidelines:
The $7,500 is available to singles, married couples filing jointly and unmarried buyers, as long as they haven’t owned a home in the past three years. If one person meets the requirement and one doesn’t, then you get $3,750.
This tax credit doesn’t apply towards investment properties, and no second homes or vacation homes.
If you buy the home from a relative, you do not qualify.
If you meet all these requirements, but you earn more than $95,000 as a single tax filer, or $170,000 married joint filer, you are subject to reduced credits based on a phase out schedule.
With interest rates at all time lows, a great supply of inventory homes to look at, and now this tax benefit, it is estimated that this could lead to an additional 202,000 home purchases this year. How they estimate this number I have no clue! The National Association of Realtors is pushing for the deadline for this program to be extended to Dec. 31st of 2009.
The senate is expected to vote on this bill next week. Hopefully for all first time homebuyers contemplating a purchase, this will pass.
