First Time Home Buyer Tax Credit Is Now $8,000…
The tax credit was increased to $8,000 however there is lots of confusion regarding this credit and we will attempt to lay it out in a few short bullet points for you…
1. The tax credit is NOW really a true credit and not a loan. Prior to the recent changes, the tax credit had to be repaid over 15 years. The new tax credit does not have to be repaid in most instances.
2. The tax credit is not $8,000 for everyone. It is $8,000 or 10% of the purchase price….whichever is less. So, if you buy a home for $70,000, then your tax credit will be $7,000.
3. To take advantage of this credit, you must purchase your home by Nov 30, 2009.
4. Definition of FIRST TIME home buyer – According to the IRS, a first-time buyer is a person who has not owned a home within the past three years. If you and another person buy the house together, EACH of you must be eligible. The same rules apply to married couples. If you own vacation home, then that is ok…you can still qualify for the credit.
5. Income limitations – Your adjusted gross income for single borrowers must be les than $75,000 or less than $150,000 for couples.
6. Other limitations – You must live in the home for at least three years as your primary residence or you will have to repay the entire credit on the tax return in the year that you sold the home.
Hopefully this helps to explain some of the details and misconceptions regarding the tax credit.
The program, which took effect Jan. 1, allows older homeowners to use the proceeds from a reverse mortgage to purchase a new principal residence. To qualify for a new purchase reverse mortgage, buyers need to be seniors over age 62 and presently own a home. Read more about reverse mortgages HERE.
3. Higher FHA and conforming loan limits. The maximum FHA loan limit for high-cost areas has been raised to $729,750 from a recently lowered limit of $625,000. The stimulus package restores the 2008 limits through the rest of 2009. This will help keep a greater percentage of loans in the “conforming loan” category. Conforming loans have lower rates makes it easier for borrowers to qualify for mortgages. This can help in areas where real estate values are extremely high.