Tax Credit Stimulous Plan For First Time Homebuyers


The new tax credit for First time home buyers was passed.  The tax credit included in the economic stimulus legislation is as follows:

1.  A tax credit equivalent to 10% of the purchase price of the home.  The tax credit is capped at $8,000, and only applies to first time home buyers and principal residences. BUT it does NOT need to be re-paid, like the earlier tax credit.

2.  A first time home buyer is someone who has not owned a principal residence in the last three years.  So, you could have owned a home before, or own a vacation home and still qualify for the tax credit!!! J

3.  The new tax credit is applicable only to persons who purchase between the dates of January 1, 2009 to December 1, 2009.  Anyone who bought a home last year does NOT qualify for the credit.

4.  The tax credit IS subject to income limitations.  Single buyer’s adjusted gross income cannot exceed $75,000.00; married borrowers cannot exceed $150,000.00 to qualify for the credit.

5.  The tax credit is REFUNDABLE.  Qualified borrowers can take advantage of the credit, even if they do not have much tax liability.

6.  Buyers that take advantage of the tax credit must keep their home for at least 3 full years, or will be required to pay back the return to the Federal Government.  Some exceptions would be made certain cases, such as divorce or death.

As an added note:  USDA Rural Housing Funds are available 100% financing.  It is a fixed rate with no monthly mortgage insurance and NO pre-payment penalty.