Remember Me
forgot your password?

First Time Homebuyer? Give Me a Break! (a Tax Break Please)

If you are (or will be) a first time homebuyer purchasing a home between April 9, 2008 and June 30, 2009, you may be eligible to receive a tax credit.  Good news, right?  This tax credit is kind of like a fifteen year, zero interest loan.  Not a bad deal, huh?

 

The tax credit you can claim is equal to the lesser of $7,500 or 10% of the price of the home.  So if you buy a $65,000 home, you can claim $6500.  But, if you buy a $85,000 home, you can only claim $7,500. The main catch is you have to pay the credit back to Uncle Sam over the next 15 years. However, it’s interest free. You start doing so the second tax year following your home purchase, so you have a little breather before you start.  If you sell your home before you’ve settled your debt, you have to pay it back upon sale.  But you won’t owe the full amount of the outstanding credit due if your gain from the sale of your house is less than what you owe.

 

You have to qualify for the benefit, naturally.  And the amount for which you can qualify varies.  You have to be a first time homebuyer, as mentioned above (and that includes your spouse if you’re both on the loan) who has had no ownership interest in a principal residence for the past three years (date of your home purchase).   You see, in the mortgage world, if you haven’t had a mortgage within this time frame, the fact that you owned and sold a home five years ago doesn’t count.  Mortgage Lenders and underwriters want more recent history.

 

The tax break will not apply to you if you obtained a THDA (Tennessee Housing Development Agency) loan because the thought process is you’re already ahead from receiving benefit of use of proceeds from a tax-exempt revenue bond.  In other words, the government’s already given you a deal.  No double dipping allowed.  You also can’t be a non-resident alien, and you have to keep your home for at least a year to claim this particular tax benefit.  So, if you’re transferred and have to sell your home in six months, you’re out of luck.

 

There is an income cap that must be met for qualifiers.  If you’re single, the benefits available start to dwindle if you earn more than $75,000 per year, or $150,000 for joint filers.  It’s unavailable completely if you earn $95,000 individually or $170,000 jointly. 

 

So is this deal a good one for you?  How could you take advantage of it?  Well, again, look at it as an interest free loan.  You can put some nice appliances in a kitchen, finish out a basement or do some landscaping for this type of money.  So, it can work to your advantage.  But make sure you qualify before attempting to take this credit.  It’s not the type of thing you want to make a mistake about because filing your taxes is serious business.  And if you do qualify and it makes sense for you, spend your money wisely.  The ultimate goal is to get this economy moving, so if enough people can take advantage of it, it just may work.  It’s worth a try, right?

Kristin Abouelata - Home Loans

Let My Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at http://www.kristinmortgage.com/ Home Loans Plain Talk.

Rate this Article: 4 / 5 stars - 1 vote(s)
Print Email Re-Publish

Add new Comment



Captcha
+1
1. Bob (20:41, 21.01.2009)
If I bought my house in 2007 with an adjustable mortgage & refinanced in April 08 with a 30 yr fixed, do I still qualify for the FTHB Tax Credit?

  • Latest Mortgage Articles
  • More from Kristin Abouelata - Home Loans

Obama Stimulus Plan has Mortgage Refinance and Modification Benefits

By: MPetrone | 24/11/2009
Do you owe more than your home is worth? Have financial problems and want to refinance into a lower monthly mortgage payment? Been denied a refinance in the past? Do not panic. New Government stimulus programs are in place to help. This stimulus program has over $75 billion in funding and can help over 8 million homeowners. Here are some things you should know.

5 Benefits The Reverse Mortgages Offer For Seniors

By: Juhani Tontti | 24/11/2009
Many Americans have heard about the reverse mortgages for seniors, but do not really know the benefits, which the reverse mortgages give. I will go through the major facts about the question, what is reverse mortgage?

Check Out These Important Tips Before Availing Mortgage Refinance!

By: David Mcleroy | 24/11/2009
Mortgage refinancing can bring in many benefits for the individual, however it’s important to understand the process in details, and consider the pros and cons. Check Out some important point which can help you in deciding your mortgage refinance loan.

How to Make a Compelling Hardship Letter for your Loan Modification

By: Lee Sebele | 23/11/2009
The Hardship Letter is probably the most important document you need to prepare for a loan modification application. Most lenders don't read beyond the hardship letter to consider your application. Knowing how to write an impressive letter determines whether your application goes to the active files or to the paper shredder.

What to Expect from a California Loan Modification Attorney

By: Christine Hynes | 23/11/2009
This article details the general process a loan modification attorney will take a buyer through as they negotiate a loan modification with a Lender.

Questions About Loan Modifications

By: Christine Hynes | 23/11/2009
Many people have questions regarding the foreclosure and loan modification process. This article contains some basic questions and answers many people may have about the process and some possible solutions for them.

Home Owners Denied Loan Modifications Feel Cheated by Their Bank

By: Christine Hynes | 23/11/2009
Homeowners trying to get loan modifications from their banks feel they are being lied to and misdirected intentionally by their banks.

Chase Mortgage Modification Fraud, Scams, and Dirty Tactics

By: MPetrone | 23/11/2009
Many homeowners are reporting problems with getting a Chase mortgage modification. In fact, a lot of people are saying that Chase has charged them over $700 in fees, with no real intent of delivering on any promises of a mortgage modification. People are complaining and we are listening. Here are some of the common problems Chase is giving homeowners who are applying for a home loan modification.

What’s the Low Down on Loan to Value?

By: Kristin Abouelata - Home Loans | 01/12/2008 | Mortgage
When buying a home, most people only concern themselves with the interest rate and the type of loan they are getting. However, the loan to value may be another aspect to take into consideration.

Mortgage Lending and Identity Theft: What You Should Know

By: Kristin Abouelata - Home Loans | 22/10/2008 | Mortgage
When you apply for a mortgage these days, lending institutions gather enough information on you to form an independent DNA sample (not really, but you get the picture). What steps should these organizations take to protect you from identity theft?

Mortgage Lending: It’s a History Lesson

By: Kristin Abouelata - Home Loans | 08/10/2008 | Mortgage
When applying for a loan, a mortgage lender cares more about your past than your future. And sometimes, a lender cares more about your past than the present……

Interest Rates: One Man’s Gain is Another’s Loss

By: Kristin Abouelata - Home Loans | 01/09/2008 | Mortgage
How can two borrowers can buy the same house, and get completely different interest rates? There are multiple considerations to take into account when a lender is pricing an interest rate for a customer……

First Time Homebuyer? Give Me a Break! (a Tax Break Please)

By: Kristin Abouelata - Home Loans | 01/09/2008 | Mortgage
The Housing Assistance Tax Act, which is a section of the recently passed Housing and Economic Recovery Act, provides some incentives to put the residential housing market back on it’s feet. Are you in a position to take advantage of them?

Jumbo Loans and White Elephants: Will the Pace Pick Up?

By: Kristin Abouelata - Home Loans | 04/08/2008 | Mortgage
The rates for jumbo loans (loans above $417,000) have caused somewhat of a glut in the real estate market of higher end homes. What’s caused these rates to stay steadily higher while rates for traditional loan sizes have seen record lows in the past months?

Need Cash for a Home Closing? Consider a Gift

By: Kristin Abouelata - Home Loans | 22/07/2008 | Mortgage
Coming up with a down payment or money for closing costs for a home loan can be a challenge these days. What extra money you were setting aside may all of sudden be going toward your gas tank or your grocery bill. To obtain your dream of homeownership, it may be time to accept that gift from Mom and Dad………

Submit Your Articles Free: Signup
Article Categories




Use of this web site constitutes acceptance of the Terms Of Use and Privacy Policy | User published content is licensed under a Creative Commons License.
Copyright © 2005-2008 Free Articles by ArticlesBase.com, All rights reserved. (0.56, 6, w1)