First Time Home Buyers Have 53 Shopping Days Left!
By Jennifer Prestwich
By now you have all heard about the $8,000 First Time Home Buyers credit. But what exactly does it mean? Is it a loan? A Tax Deduction? Will I have to pay it back?
The answers are, in order: No, No and No! You can get up to $8,000 as a REFUND if you close on your home before the deadline November 30. So, what's the catch? Let me explain.
First, you must be either a First Time Home Buyer, or you must not have owned a home for 3 years. If you have been renting, now is the best time to get yourself into a townhome, condo or single-family home. Although it has been improving over the last 4 months, it is still a buyers market and there are great deals to be had. But, you need to start searching now. Whether you are using Conventional Financing, FHA, VA or even if you purchase with CASH, you can take advantage of this. THE CATCH: You must live in the house for three years. Otherwise, the credit will be recouped upon sale of the home.
Second, not everyone will qualify for the $8,000, but most of you will. The price of the home determines how much you will get; 10% of the price of the home, up to $8,000. Very few of the homes for sale right now are listed under $80,000, so most buyers will get the $8,000. THE CATCH: If you are single and make more than $75,000, or married filing jointly and make more than $150,000, you will get less. The maximum amounts are over $95,000 income for individuals and over $170,000 for couples. The credit amount decreases as you approach the maximum amount of income.
Third, this is a credit, not a deduction. The difference? Uncle Sam will be writing you a check for $8,000. That's it. THE CATCH: You have to either wait until after your taxes have been filed OR amend your 2008 tax return.
Most importantly, remember that this will not last forever! You must close on your property before December 1, 2009. That means you should be under contract by October 1 so that you have plenty of time for the contract to go through.