If you plan on buying a home in 2009, the government plans to say “thank you” in a major way. Without voicing my opinion on whether I think this is a good idea or not, I’d like to give my clients the facts and those that are sitting on the fence the information they need.
The economic stimulus bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. This credit does NOT require repayment. (Different than last year’s credit.)
CNN did a great coverage here that explains mechanics of the credit.
“Scenario 1: Your final tax liability is normally $6,000. You’ve had taxes withheld from every paycheck and at the end of the year you’ve paid Uncle Sam $6,000. Since you’ve already paid him all you owe, you get the entire $8,000 tax credit as a refund check.
Scenario 2: Your final tax liability is $6,000, but you’ve overpaid by $1,000 through your payroll witholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.
Scenario 3: Your final tax liability is $6,000, but you’ve underpaid through your payroll witholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.”
Those who qualify for the credit must purchase their home between Jan1, 2009 and Dec. 30, 2009 and they must be first time homebuyers. (Buyer’s may not have owned a home for the past three years, and they must live in the house they purchase for at least three years, or they must pay back the credit.) Another restriction pertains to buyer’s incomes. To qualify, buyers must make less than $75,000 for singles or $150,000 for couples.
Hopefully, this credit will create a domino effect in the housing market. Another way to look at the tax credit is as a discount. In effect, a $200,000 is now a $192,000. If you are considering a move, don’t miss the Best Priced Homes for Sale in Summerville.
Feel free to leave a comment or e-mail me at Foster@HomesofSummerville.com about your situation and if you are ready to move forward.