How will the 1st Time Home Buyer Credit work?

How will the 1st Time Home Buyer Credit really work?

The other day at lunch a colleague of mine asked, how will the 1st Time Home Buyers Credit affect my tax return? In order to be sure I contacted several Certified Public Accountants. As you can imagine since we are dealing with the government, the answer is not simple but . . . the answer is exciting!

We have already discussed who can qualify, 1st Time Buyers and those that have not owned a home in three years.

Now lets examine the tax credit itself. We know it is a $8,000 credit - for a married couple and $4,000 for unmarrieds as joint borrowers. What the CPA's taught me is the tax credit is a dollar for dollar.

Let me explain, say you purchase a home for $80,000 (or more) between the first of the year through December 1st, you will be able to receive the full $8,000 tax credit - a dollar for dollar deduction from your tax due liability. What many do not understand is that if you purchase a home for $60,000 then you will receive a $6,000 tax credit. The rule is "10% of the purchase price".  The rule further requires home buyers to maintain their primary residence in this newly purchased home for a minimum of three years or other rules apply.

Now for the good stuff - lets say you had your account do your taxes and you owe the IRS $2,000 in taxes. As a 1st Time Home Buyers (and those who have not owned a home for the past 3 years) you will be able to use the 1st Time Buyer Credit to wipe out the $2,000 tax liability plus receive a refund check in the amount of $6,000. Yes, cash in hand!

I know you have never seen anything like this before and believe me, you probably never will again. So go out there and get qualified for a home loan and take advantage of this awesome home purchase incentive. This Tax Credit is huge when coupled with reduced home prices and historic low interest rates.

Get qualified for your home mortgage at www.minocquamortgage.com or contact marcia@minocquamortgage.com

Posted by Minocqua Mortgage Blog at 4/8/2009 1:19 PM
Categories: Credit Scores
 

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