There’s a bit of urgency now when we speak about the First Time Buyer Tax Credit. Mostly because it will be over by the end of November. Secondly, the Federal Reserve has given some indication, according to economist, that it may raise the prime lending rate at the end of September. If the prime lending rate increases, it could signal an increase in home lending rates as well (even before the deadline to purchase).
It can take 30 to 45 days to close a loan, so to take advantage of the tax credit most people will need to have their property under contract by the middle of October.
There is no doubt that the first time home buyer tax credit is a great thing but there are a few things to know before you assume that you qualify for the full $8,000. The tax credit breaks down as follows:
Who qualifies? First time home buyers and people (or spouses) who have not owned a home for the previous 3 years. You must purchase your home between January 1, 2009 and December 1, 2009.
- What qualifies for the first time home buyer’s tax credit? Only a primary house qualifies. It does not matter if it is a single family home, duplex, townhome, condo, apartment or co-op, if it is a primary residence it will apply.
- What is the amount of the first time home buyer’s tax credit? $8,000 is the maximum amount of the credit. There are 2 factors at play when it comes to getting the credit: The cost of the home and the income of the person or married couple purchasing the home. The credit can be 10% of the closing price up to $8,000 or a person making $75,000 or less or a married couple making $150,000 or less are eligible for the full $8,000.
- Do you qualify for the first time home buyer’s tax credit if your income is higher? Yes and no. If you make more than the $75,000/$150,000 limit you get less of a credit. The maximum income is $95,000 for singles or $170,000 for couples. If you make more than the maximum income you are not eligible for the tax credit.
The tax credit is a real boon for first time home buyers and does not have to be repaid. If you qualify for the tax credit and have been considering purchasing a new home there could not be a better time. Low interest rates, low home values and the first time home buyer tax credit all add up to the right time to call your experienced Century 21 Four Seasons Realtor.
Resource and for more information: Realtor