As promised, I wanted to cover some of the good news that came out of the Housing and Economic Recovery Act of 2008, which was signed into law by President Bush at the end of July.
There’s a provision targeted for first-time home buyers who bought, or will buy, their home between April 9th of this year and July 1, 2009. You can receive a tax credit of up to 10 percent of the sales price, up to $7,500.
This is a tax credit, not a tax deduction. A deduction is an item that is subtracted from your annual income before income taxes are calculated. A tax credit is subtracted from the amount of taxes you owe.
Now you might be thinking that you don’t qualify since you’ve owned a home before. In reality, a “first-time home buyer” is defined in the new law, and includes those who may have owned a home in the past, but not within the last three years.
There are, as you would expect, income limitations on the tax credit – $75,000 per year if you’re single and $150,000 if filing a joint return to qualify for the full credit. The credit does phase out beyond those amounts up to $95,000 for singles and $170,000 for joint filers.
And one last caveat, the tax credit isn’t a gift – you do have to pay it back. It is effectively an interest fee loan that is payable over a 15 year period and repayment doesn’t begin until two years after purchase. If you sell the property before the tax credit has been fully repaid, any remaining amounts owed are due to the IRS upon closing.
You’re not required to file for the tax credit, that is completely up to you. The loan limitations for the program in metro Atlanta are $318,550. When combined with the new FHA requirement of a minimum 3.5% downpayment, that would cap the purchase price of your new home at about $330,000.
If you have any questions, feel free to contact us and we’ll be glad to fill you in on the details and discuss your options. And certainly, if you know of anyone thinking about purchasing a home, be sure to have them give us a call and we’ll be glad to advise them.
The good news is that there is quite a few homes, townhomes and condos in Smyrna Vinings up to this price range to consider. We’ve set up some home searches for you below, so simply click on the area you’re interested in purchasing a home.
Vinings homes, condos and townhomes
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Mableton homes, condos and townhomes
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