First Time Homebuyer Tax Credit
As part of the recently Congress-passed Stimulus Bill, the “American Recovery and Reinvestment Act of 2009,” there are many relevant items within the bill that the readers of this site should be aware of.
As you know, we are currently selling our townhome For Sale By Owner, but have not yet listed it on the MLS. Within the stimulus package, there is a section related to a first time homebuyer tax credit. It is summarized as follows. “The new law raises the current maximum $7,500 first-time homebuyer tax credit to $8,000, and extends it at that level through November 30, 2009. It also eliminates any required repayment to the IRS after 36 months in the home. These enhancements apply to purchases of a principal residence by a first-time homebuyer after December 31, 2008. Purchases on or after April 9, 2008, and before January 1, 2009, continue to be governed by the original homebuyer credit enacted last year. The credit phase-outs that start for taxpayers with AGI in excess of $75,000 ($150,000 for joint filers) continues to apply to both years.”
Note 1: The effective date for the new law’s no pay-back provision is keyed to “residences purchased after December 31, 2008.” A purchase takes place when title closes rather than when a contract of sale is executed.
Note 2: The Senate had proposed raising the credit to $15,000 and making it applicable to all home purchasers regardless of income level. Those enhancements were all rejected during conference negotiations.
Closing: This may be a great time to buy that first house. In order to qualify for a home mortgage and to obtain a competitive interest rate, most lenders would like to see at least 10% down payment, with 20% being ideal. Remember, the monthly payment isn’t the only key item to analyze when computing how much house you can afford. Keep in mind the amount of money you have for a down payment and also ensure you have an appropriate Emergency Fund and money set aside for future potential maintenance and renovation items.
Below are some useful mortgage calculators brought to you by CCH:
| Mortgage Qualifier | Can you buy your dream home? Find out just how much you can afford! |
| Mortgage Required Income | Use this calculator to determine how much income you need to qualify for a mortgage and how different interest rates affect your required income. |
| Mortgage Tax Savings Calculator | Interest and points paid for a home mortgage are tax deductible. Use this calculator to determine how much your mortgage could save you in income taxes. |
MF
About the Author: Mike is the founder of this site, www.mikefanelli.com He has extensive professional experience in accounting and financial analysis, and is currently a licensed CPA in the state of North Carolina.
