Safiur Rahman asked: If you are looking to buy your first home, this could very well be the best time to do it. If you’ve been keeping up with the news, it is likely that you are familiar with President Obama’s economic stimulus package aimed at boosting ailing housing market. The first time home buyer stimulus is an important part of this stimulus package as it awards home buyers a tax credit of 10% of the purchase price of their home (with a maximum of $8000). This is essentially money in your pocket because you do not have to pay this back unless you sell your home within the first three years. The great news is that the deadline has been extended until April 30th, 2010 from the previous deadline of December 1st, 2009. You actually have until June 30th, 2010 to close but must be in a binding agreement by April 30th, 2010. This gives you a few more months to shop around, get in touch with mortgage brokers, and apply for a loan with terms that work for you.
There are two key requirements that you must meet in order to qualify for the tax credit. The first requirement is that both you and your spouse (if applicable) must meet the definition of a first time home buyer as per the current legislation. You are considered a first time home buyer if you have not purchased a home as your primary residence in the three years prior to your current purchase. Vacation homes and rental properties do not count as primary residences; therefore, if you purchased one of those, you may still qualify for the credit. The specific type of home (e.g. townhouse, condominium, mobile home, houseboat, etc) also does not matter as long as it is your primary residence. Secondly, you must fall within certain income limits. For homes purchased after November 6th, 2009 single tax payers must not earn more than $125,000 per annum and couples filing jointly must not earn more than $225,000. Until recently, these income limits were significantly lower and unfortunately the changes are not retroactive. If you purchased a home between January 1st, 2009 and November 6th 2009, then you must not have made more than $75,000 per annum if filing as a single tax payer and not more than $150,000 if filing jointly with your spouse in order to claim the credit.
Having discussed the two key requirements above, I must also mention that there are other factors that may preclude you from qualifying for the tax credit or require you to repay it. For example, if you buy new home from a close family member such as a parent, grandparent, child, or spouse then you do not qualify. Similarly, an RV or recreational vehicle does not qualify for the tax credit because it is considered “personal property” that is not affixed to a piece of land. The law may also change from time to time so you really have to stay on top of the latest developments. The best advice I can give you is to plan ahead, do all your research and due diligence, and familiarize yourself with the legal caveats in a way that will make this program work for you.
Crystal
