Details of $7,500 Tax Credit/Refund

Now of course there is some fine print with the $7,500 tax credit that you may be eligible for and here is some fine print you must be aware of—

· There are income limits for this tax credit that begin at $75,000 for individual taxpayers and $150,000 for married filing jointly taxpayers.

· You can’t buy a home from a family member.

· You can’t obtain a mortgage from CHFA, a down payment assistance loan type, and receive the tax credit.

· You must own the home at the end of that taxable year. Believe it or not this has come up with one of my clients already.

· If you are married filing jointly both spouses must not have owned a home in the last 3 years.

· If you are married filing separately, then one spouse could take a $3750 tax credit.

· It 2 or more unmarried people buy their first home together it appears and I assume that each person would get a portion of the $7,500 tax credit. For example, 3 buyers each would get a $2,500 tax credit. This is not set in stone however.

· Please consult your tax advisor for more details and realize some of these details may not be worked out yet.

One other great benefit of this bill is even if you buy a home in the first 6 months of 2009 you can receive the credit and refund on your 2008 tax return.

This bill comes at a great time in Denver for first time home buyers as it appears that our market has already hit bottom and in some parts of town home prices never did drop (Wash Park, Platte Park, Stapleton, parts of Highlands Ranch, parts of SW Jefferson County).

So take advantage of this great offer by June 30, 2009.

What Only 1 First Time Home Buyer Knew

Since July 30th when President Bush signed into law The Housing and Economic Recovery Act of 2008 I have been amazed how few first time home buyers know about a great provision in this bill that applies to them. How few? Only one first time home buyer, out of dozens that I have talked to, in the last 3 months have known about this benefit and he was a financial advisor.

One of the main provisions of this bill is a $7,500 tax CREDIT for eligible first time home buyers and a tax CREDIT is far better than a tax deduction. This credit will directly reduce your IRS tax bill by up to $7,500. In instance, if your income tax owed to the IRS this year is $9,000 and you paid to the IRS through employer withholdings $9,000, you would be eligible for a $7,500 tax refund!

If your total tax bill is only $6,000 and you paid $6,000 already to the IRS through your withholdings on your paycheck, you will receive a refund of $7,500 which is more than you paid in!

Would you like Uncle Sam to give you $7,500 next year when you file your tax returns? If so, here is what you have to do—

· First, be a first time home buyer defined as someone who has not owned a home in the last 3 years.
· Buy a home with a value of $75,000 or more. If you buy a cheaper home your credit will be a little smaller.
· Must, buy a home between April 9, 2008 and June 30, 2009.

Please realize that this is money that does have to be repaid to the IRS over 15 years beginning in tax year 2010 in increments of $502 a year. Thus, it is essentially an interest free loan, which is the best kind of loan. You get all the benefit now (Instant Gratification) that you repay over time.

Now, how can you use this money to buy your first home? Really the only way possible is to obtain a loan from a family member for the amount of your down payment, normally 3% of the sales price. Then, next year repay them when you get your tax refund. Another idea is adjust your W-4 Withholdings with your employer so that more money stays in your pocket. This would be a great idea if you intend to buy your first home in 2009.