Okay, so this isn’t new news. This is the third go-round with the first time buyer tax credit. The subsequent tax credits have been “bigger and better” with new additions, making the most recent credit the “best”. Remember last year — the tax credit that would expire at the end of November? Wow were people hustling to get their home loans closed by that date. There was a call to action, an actual deadline. Buy your first home now or lose money! Let’s get real — you can’t lose money you don’t have, so that wasn’t a great way to get people off the fence and buy. It was funny how first time buyers were coming out of the woodwork last fall to “cash-in”. Many of those buyers are still waiting for their “check in the mail”. It will come and that’s the good news.
But here’s the better news. The government is willing, yet again, to pay you to buy your first home. Oh, and if you’re not a first time buyer, no problem. You get to reap the benefits too if you meet a few qualifications — you must have lived in your home for at least 5 consecutive years out of the last 8 years. For the non-first time home buyer, you can get up to a $6500 tax credit! For the first time buyer, you could pocket up to 10% of the sale price with a maximum amount of $8000. Seriously, I wish I was in the market to buy a home. There are income restrictions, which most people will fall under, so it’s a mute point. There has been some talk out there that you can use this tax credit as down payment for your home. Hmmmm, wouldn’t that be nice … getting money for buying a home prior to actually buying it. Essentially, this was ixnayed by most, if not all, non-profits because it was too risky to be fronting that kind of money. Makes sense to me.
The current tax credit is the last tax credit, so they say. When it’s done, it’s done. No more Mr. Nice Government. So what do you have to do to qualify? Buy a house. Yep, for the most part, it’s that simple. Get an offer accepted on your first home, or subsequent home, by April 30th, 2010 and close by June 30th. My guess is you would have already filed your taxes by the time you close. Well, I hope so since taxes are due April 15th. No worries. You can complete a few forms, the 1040x amendment to your personal taxes and the 5405 which is the specific form for the home buyer tax credit. This way, you won’t have to wait to file your 2011 tax returns. Oh, the stuff you can buy to fix up your first home! Not that you have to use it this way, but the government’s philosophy behind all this is that you will go out and “stimulate” the economy by buying goods and services. It would sure help me if you did, but there is nothing wrong with using that money to pay off some debt or set aside savings — all are good uses of FREE money!!
But wait; there’s more — can you hear the infomercial music? If you are a first time buyer, you can use a down payment assistance program and STILL get this credit. There is plenty of money out there just waiting for you to use. Best part about this money … it’s totally forgiven if you live in your home for three years as your primary residence. That’s another blog on it’s own.
So, assuming the government keeps their word and doesn’t extend this tax credit, you do need to act NOW. I mean, come on, houses at all time lows, rates at all time historic lows and money to help you fund your down payment. Wowsers, can you say “incentive”? I think I have beaten this topic a bit too much. My advice is to ONLY buy if the time is right for you. Sure, the call to action couldn’t be stronger. But, if you’re not financial willing or able or have commitment issues, then wait. There is no reason buying your first home or buying another home if your conscience is saying “don’t”. I would hate that the pressure to “act now” pressures you to buy.
Feel free to give me a call or email if you want more information on this. And please, only “act” on this if you won’t regret it later.