All the info you need about the $7500 tax credit!
You may have heard about the government offering a $7500 tax credit to first time home buyers. I wanted to give you all the information so you can decide if you or someone you know would benefit from this opportunity. Here are the main terms:
- The tax credit is available for first-time home buyers only.
- The maximum credit amount is $7,500.
- The credit is available for homes purchased on or after April 9, 2008 and before
July 1, 2009. - Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. If you make more then this you can qualify for a partial credit.
- The tax credit works like an interest-free loan and must be repaid over a 15-year period.
Terms of repayment:
Home buyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.
Some people are not excited about the tax credit because it does have to be repaid, but take this into consideration...
The tax credit must be repaid but it operates like a zero-interest loan. With an interest rate of 7%, that means the home owner saves up to $4,200 in interest payments over the 15-year repayment period. Compared to $7,500 financed through a 30-year mortgage with a 7% interest rate, the home buyer tax credit saves home buyers over $8,100 in interest payments. Also like a tax credit, it provides a reduction in tax liability in the year it is claimed.
To see the government website containing all information, including FAQ's use the link below.
First time home buyers should take advantage of this wonderful opportunity. So if you or someone you know would benefit from this, please pass this information along.
We can help them get started in their chance towards becoming a new home owner!
Call me with any questions!
Jennifer Johnson
Keller Williams
913-314-4104