The initiative, the first of its kind in the country, provides potential buyers with access to money at closing instead of making them wait weeks for their amended tax returns. It has received HUD approval for buyers who qualify for FHA loans up to the $271,050 limit, and the hope is that it will stimulate the sluggish home-sales market.
There is more help actually for the first time home buyers.
Here is a little Q&A about the tax credit that the government recently has unveiled to help the first time home buyers and to move the real estate and housing markets to the positive direction.
1. Who is eligible to receive this "tax credit" anyway? The tax credit can go to ANY person who is purchasing/buying a home for the FIRST TIME (in a three-year period) prior to December 1st, 2009.
2. What do you mean "three-year period"? Well, say you owned a home, a long time ago. But you have NOT owned a home in the last three years. Well, you're eligible! But sorry married folks, if you or your spouse has owned a home, you don't qualify. Only those who have NOT owned a home individually or jointly may qualify to receive the tax credit.
3. Wait, so how is the amount of the tax credit determined? Meaning, how much money will you get? The tax credit is equal to 10% of the purchase price/selling price of the home - up to a maximum of $8,000. So, if you purchase your house for $100,000, 10% of that would be $10,000. But that's too much, so you would get the maximum credit of $8,000. Get it?
4. How is this NEW first-time-home-buyer tax credit different from the one that Congress passed and enacted in July of 2008? The biggest difference is that THIS NEW tax-credit DOES NOT have to be repaid. I repeat. DOES NOT have to be repaid! Basically, the previous tax credit was like a loan that didn't have any interest associated with it, basically making it not really an actual tax credit. However, the homebuyer MUST stay in the home for 3 years or else you may have to pay some of it back.
5. Can you combine this tax credit in conjunction with any other first-time-home-buyer tax credits? Nope, sorry Greedy Gus, you can only choose one.
6. How do you make sure you are going to receive this tax credit? Well, you are going to file for this tax credit on your 2009 federal tax return and it will show up then. If you have any doubts, ask an accountant or CPA. I know that I, myself, am not always the best at filling out forms, so it's always smart to have someone double check your work. Oh, and if you want to receive it early, talk to an accountant. You may be eligible to have less money taken out of your paychecks in 2008. Wouldn't THAT be sweet?
In conclusion, this NEW-First-Time-Homebuyer-Tax-Credit is a pretty awesome deal. Essentially making this the PERFECT time to buy a home. The market is TRULY a buyers market and you can only benefit from buying a home right now.
Jim Ingersoll contributed to this story.