First-Time Homeowners Qualify for $7,500 Tax Credit

From on September 12, 2008 in General Remodel

first homeFinally, housing prices have come down to an affordable level. Along with an ample selection of homes on the market, sellers are eager to bargain. There are many exciting aspects to purchasing your first home; and to make it even more attractive, there is a tax credit for first-time homebuyers, just recently signed into law this past July.

A part of the Housing Rescue Bill, this $7,500 tax credit is an incentive for first-time homebuyers, enacted in the hopes of stimulating the lackluster housing market. To qualify, the home must be your primary residence, and you can’t have owned a primary residence in the past three years. (Vacation homes and rentals don’t count as a primary residence.) There are also some income requirements, namely you can’t make more than $150,000 as a couple and $75,000 as an individual. This varies a bit based upon circumstances. In case you’re procrastinating, there is a limited window of opportunity for this credit. Your escrow must close between April 9, 2008 and July 1, 2009. The credit is for 10% of the sales price, not exceeding $7500.

It is important not to confuse this credit with a deduction. A credit is essentially a no-interest loan, and you must start making payments within two years of purchase. When you sell the house, the loan is paid off with any profits, although it will be forgiven if you take a loss on the property. This program will hopefully make new homeownership more enticing for apprehensive buyers. Why not take advantage of this program? With lenders hesitant to offer equity loans on homes, this is just another way you can finance a remodel. Keep that thought in mind as you search for your new home, remembering that you’ll have a bit of cash to put towards fixing up that trouble area.