Home Buying Tips, Industry Related News

Clearing Up Some Mis-conceptions About the $8,000.00 Tax Credit

Ever since the government announced it, there’s been lots of talk, and plenty of excitement, surrounding the $8,000 federal tax credit for new homebuyers.  Think you know everything about it?  Think again…

With all of the information out there, there’s also been some mis-information floating about as well, and we aim to set the record straight.  It doesn’t matter if you’re buying or if you’re selling, because the new tax credit can help you either way.  This is info you need to know.

Let’s start off with the amount: $8,000.00

Now, that’s not $8,000.00 per person.  That’s $8,000.00 per transaction.  Single? $8,000.00.  Married? $8,000.00.  Married, but filing your taxes separately?  You get $4,000.00 apiece, for a maximum of… you guessed it, $8000.00.

Another misconception: every first time home buyer will get that $8,000.00.  Not true.  If you’re single, and your income is more than $75,000.00 a year, or if you’re married and filing jointly with an income of more than $150,000.00, you will get less than the maximum.  The more you make, the less credit you get.

And say you actually managed to find a house somewhere for $8,000.00, would you get it for free?  Nope.  If you buy a house that costs less than $80,000.00, you get 10% of the purchase price.  So, if you buy a home for $50,000.00 you’d get a credit of $5,000.00.

Here’s another mistake folks are making: you may have heard the government say the tax credit is good on homes purchased between January 1st and December 1st, 2009.  That’s true, but pay attention to the wording.  It doesn’t say through December 1st, but between January 1st and December 1st, which means if you close on that house on the first of December, you’ll be too late.  To get the credit you’ll have to settle by November 30th, 2009.

Finally, some people say you’ll have to wait to get the $8,000.00 tax credit, because you either have to file your taxes next year, or file an amended return this year, then wait for the check.  For right now, that’s true, but it could literally change at any minute!

Recently, the Obama administration announced that soon, it will allow qualified buyers to get the $8000 up front, at the settlement table for FHA and certain other loans.  When that happens, those buyers will be able to use the $8000 for closing costs and their down payment.

It just hasn’t become law yet.  Soon, but not yet.

So, please check back with us here at Taylor’d 2 U Realty regularly.  We will be sure to let you know officially when this happens!