The $7500 tax credit for first time home buyers is a significant incentive to purchase. It is a major 
positive provision in the Housing Bill that passed Congress over this past weekend. This is a credit not a deduction, which means it directly reduces the taxes owed - dollar for dollar.
This gives the new home owner directly as much as $7500 cash in the pocket at tax refund time.
The credit incentive is retroactive back to April 9, 2008 and continues through June 30, 2009. The incentive is 10% of the purchase price up to a maximum of $7500.
The actual legislation that implements this tax incentive is called the Housing Assistance Tax Act of 2008 HR 5720. It is included as part of the massive Housing Bill HR 3221, that is waiting to be signed into law.
The incentive is available to individuals who make less than $75,000 and to couples who make less than $150,000. Above these income levels the incentive is reduced and is completely phased out at $95,000 for an individual and $170,000 for a couple.
The tax credit must be repaid over the next 15 years, and more quickly if the home is sold or is no longer the primary residence. Repayment is made by increasing the tax owed in the year the home status is changed (sold or no longer the primary residence). For more details on the tax credit and repayment provisions, please see a tax accountant.
A first time home buyer is defined as not having an ownership interest in a principal residence in the previous 3 years.
This credit can be good news for many first time buyers. Some reports indicate that over 2 million first time home buyers last year, and a large percentage of them would have qualified for such an incentive it had been offered last year.
It may offset some of the less good news for home buyers in the Housing Bill with the loss of seller funded down payment assistance
Richard Smith
Home financing in Tennessee, Georgia, and Alabama.
Experience matters when it is your home loan.
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Where do I sign up?....good info Richard. With this kind of info in your arsenal, I thinkyou will have a leg-up on the competition. I would like to learn more.
Thanks
Bo
Bo,
Thanks for commenting. Your team is already on my title request. I think Stephanie in my office is really going to like working with Cogent.
Richard
Richard- I am glad you can find some good in this most wasteful of a bill as usual. Nothing for the folks here. What good is an incentive like this, it is not helping with down payments, that is where first time homebuyers need the break. Most of the people this applies to can get earned income credit and using this credit may even decrease their income tax refund rather than increase it, depends where on the earned income credit scale they fall. This is just to cover up their huge error in taking away the home buyer assistance programs and to cover up who congress is really working for, the big banks, not us.
Hi Richard. Well done. I will featuring this post for the group. You get a Gold Star!
Katerina,
Please do not read too much joy into my post. I am not happy with the Housing Bill, and this is much ado about little. I do not expect the tax credit lure to entice many into to home buying. It is really just a 15 year loan, interest free, that has the balance due when you sell your home or move.
It will not get over the obstacle of down payment.
My opinion is that this bill happened to be easily available when circumstances were urging Congress to do something.
Most of this would not have passed under normal circumstances. It was rushed, and the implementation date is October.
FHA and Congress will soon see the impact of the loss of DPA. Maybe they will work on a sustitute, but increasing the FHA down payment was not in the right direction. My phrasing "less good news" was intended to be a bit sarcastic use of understatement - it may not have come across in the post.
Richard
William,
Thank you sir. It was difficult to find the actual bill language. It is not in 3221. If you would like, I will put the link to the bill in the post. Maybe someone else can make more sense of it.
Richard
Richard, I like you searched for the actual language in the bill. It is 537 pages of unbelievable goobly gook. I wonder how many, if any, of the congress actually read it. I agree, the bill doesn't do the one thing that would help the most, down payment assistance. In actuality, it does away with the DPAs that did help there.
Fred,
I do not think the bill does much for foreclosure relief or for market stimulus. Maybe I am wrong. I hope I am wrong.
Thanks,
Richard
A tax credit that needs to be repaid in the future. What are you getting -- nothing. It is ridiculous.
Herb....
Well thats what you get when you elect democrats a nicely worded PR stunt, than in actuality means they arent going to help us, and instead will make us pay MORE.
Just to clarify the above comment from an unidentified Steve, about electing democrats. The tax credit passed with bipartisan support and a Republican President's signature.
Further political comments will not be accepted on this post.
Feel free to comment on the good or bad of the bill, but no political/party biased remarks will be allowed, without factual support.
Quite frankly, there is plenty of blame to go around with the housing bill. You do not need to read far into my blog to find my opinion of the bill.
But base you opinion on supportable facts, or the comment will be deleted.
Thank you,
Richard
Wonderful post!
Can you also post it in the Real Estate and Taxes group? I'll be sure to get it featured!
Thanks
OK been searching for hours! Do I or DO I NOT qualifiy for the 8000 tax credit with the THDA down payment assitance program. H and R Block says yes the realtor says NO! HELP!!!!!!!
Thanks!