Home Buddies - Houston Credit Repair Coach for Investors and Homeowners

Tax Credit to Stimulate Housing Market

When Congress passed the housing rescue bill (The Housing Assistance Act of 2008), within the bill was a tax credit for first time home buyers. This was to entice more potential buyers to enter into the market to stimulate the troubled real estate markets. Let’s take a closer look at how this new legislation will work to help close more real estate deals.

The new tax credit applies to first time home buyers or people who have not owned a home for three years (home is defined as your primary residence). This also applies to a married couple. If one of the partners has owned a house within the last three years, then neither one may apply for the new tax credit. If you own several vacation homes but do not own a primary residence then you would be eligible for the credit. This is because these other homes are not your primary residence; therefore, you would have not owned a home in the past three years that was your primary residence.

Your income must fall within a certain range in order to qualify for the credit. If you are single then your “modified adjusted gross income” can be up to $75,000, and married couples with incomes up to $150,000, to qualify for the full tax credit. If you are an individual who makes more than the aforementioned thresholds then you can qualify for a lesser tax credit. Finally, taxpayers with adjusted gross income above $95,000/ $170,000 phase out of the program completely.

If you would like to apply for the tax credit, the good news is that you do not have to apply. All you have to do is claim the tax credit when you file your taxes. Just make sure to double check your eligibility before you decide to buy and or claim the tax credit. Basically how it works is, the tax credit will offset any unpaid taxes. If you do not owe any taxes then your tax refund will be increased.

Here is the important detail that you want to make sure you are aware of. The credit is available for homes purchased between April 9, 2008 and July 1, 2009 and applies to both new and existing homes whether attached or detached, condominiums, mobile homes, or houseboats. If you are having a new or custom home built, you qualify as long as the home is first occupied between the April 2008/June 2009 dates.

Well now that we know a little more about the new tax credit, we have become more knowledgeable of how our government is attempting to stimulate and stabilize the housing markets.

Cliff Pape
Home Buddies