Sunday, February 1, 2009

Interest free $$$ for first time home buyers!

Recently, congress passed the "Housing and Economic Recovery Act of 2008". A part of that act provided for an interest free tax credit of up to $7,500 for first time home buyers that purchase homes between April 9 of 2008 and July 1, 2009. The income limits for the participant are $75,000 per year for a single person or $150,000 for married, filing jointly.

Here is how it works. You find and purchase a home through Diane Vespa. Well, actually, you can use any Realtor but since this is MY blog I'm going to take the liberty to embellish it in my favor! Lol! You finance the home through the lender of your choice and close as usual.

Come tax time at the end of the year, you claim a $7,500 tax credit on your tax return. For example, if you would have otherwise been entitled to a $2,000 refund, you will now receive a whopping $9,500 tax refund! If your tax return says you OWE $2,000., you will actually get a refund for $5,500, with the tax credit applied.

You will then be expected to pay back the loan to the tune of $500. per year for 15 years. Voila! $7,500 tax free loan for 15 years. What a great way to get a jump start on some equity, or upgrade or redecorate your new home. Hurry though! This program, if not renewed, will expire on July 1, 2009. The full details of the program are available here.

Of course, my explanation of this new program is very general. Please don't rely on anything herein as tax advice. For more specific information about this program and how it applies to your personal circumstances, please contact your tax preparer.

If you are a first time home-buyer and would like an e-mail list of homes in your price range please drop me an e-mail at dianevespa@yahoo.com, or give me a call at 309-645-8608!

3 comments:

Sud O. Nym said...

Two points:

1. If you don't have $7,500 worth of tax liability, you don't get the full amount in year one. For example, if you only paid $5000 in federal withholding, and aren't entitled to a refund, you would only get $5000. I think the balance (in this case $2,500) can be rolled to the next year.

2. The Senate last night increased the tax credit to $15K and you don't have to be a first-time home buyer. I don't know if it will make the final bill in this form, but its a pretty sweet deal.

Diane Vespa said...

Are you sure, Sud? My understanding is that it would turn an amount due into a refund due....

Sud O. Nym said...

I stand corrected. After talking to a mortgage broker friend, I realize I had no idea what I'm talking about.

But I do have a question for you Diane, as a self-proclaimed Republican. The GOP has been slamming parts of the stimulus bill as "welfare" -- giving tax rebates to people who don't pay taxes. If only paid $5000 in federal taxes this year, but get a nice check for $2500 because of the (current) incentive, how is that not redistributive?