$8,000 Tax Credit Q&A's

As you all know, right now is a phenomenal time to buy a home. The best benefit out there is for the First-Time Home Buyer. Not only are home prices the most affordable we have seen in the past 13 years, the government is offering an $8000 tax incentive. Here is a quick Q & A to help understand some of the points on this incentive:

Q:
A:
How much is the credit?
The tax credit would be $8,000 or 10% of the purchase price, whichever is less.
Q:
A:
What type of purchase is eligible?
Similar to the $7,500 tax credit included in the Housing and Economic Recovery Act of 2008, the $8,000 tax credit included in the 2009 economic stimulus plan is available for the purchase of a principal residence by first-time homebuyers.
Q:
A:
Who qualifies for the first-time homebuyer credit?
According to the IRS, any taxpayer who has not owned a home during the 3 years prior to the date of purchase can qualify for the credit.
Q:
A:
And I really don't have to repay the credit?
No. This is a change from the previous $7,500 tax credit. However, if the home is sold within three years of purchase, the credit will be reversed.
Q:
A:
Are there income limitations on the tax credit?
The tax credit begins to phase out for individuals with adjusted gross income over $75,000 ($150,000 for joint filers).
EXAMPLE: If an individual has a tax liability of $4,000 and was a first time home buyer, they will, instead of paying $4,000 to the IRS, get $4,000 back.


Remember also that when purchasing a home through FHA that the minimum required down payment is only 3.5% and FHA will allow the seller to contribute up to 6% of the sale price for closing costs, pre-paids and impounds. So if the buyer is tight on cash 3.5% is much better than a regular conventional 10% down payment. FHA rates are still in the 5 percent range for a 30 year fixed!

As always, if you or any of your clients have questions regarding any loan programs I would be happy to sit down with you or feel free to give me a call at the number below or shoot me an email.

Thank you,

Jason


Jason T. Beckington
Sr. Mortgage Planner
State Financial Services
Phone: 480.444.2260
Facsimile: 866.854.8555
Email: jbeckington@LO4Hire.com
Web: www.LO4Hire.com