$8,000 Home Buyer Tax Credit

On July 30^th, 2008, former president Bush signed into law a one of the largest packages of housing legislation passed by Congress in a number of years. In addition to providing foreclosure and property tax relief to current home owners, the legislation includes provisions that will allow for refinancing of subprime mortgages, greater regulation and funding for Fannie Mae and Freddie Mac, and grant money for local governments to rehabilitate distressed properties. Most notably, however, is a provision that will provide a $7,500 tax credit to new home buyers.

UPDATE TO TAX INCENTIVE
Although many home buyers took advantage of the previous tax incentive, President Obama has revamped this program in an attempt to provide greater incentives for people to take advantage of the great buyers’ market that currently exists.  Of the changes to the tax incentive program, the most important differences are:

• The tax credit amount has increased from a maximum of $7,500 to $8,000 – or 10% of the home’s purchase price.
• Repayment within five years of the purchase date was required with the previous tax credit.  The updated legislation provides a tax rebate that will NOT have to be repayed.  Instead of homeowners receiving what amounted to an interest free loan, the revamped tax incentive truly provides a valuable money-back rebate.
• The end date for this tax incentive has been extended to include any qualifying new home purchase made between January 1, 2009 and December 1st, 2009 (any home purchased before January 1st, 2009 may be elligible for the previous $7,500 tax credit).

WHO IS ELIGIBLE FOR THE $8,000 HOUSING TAX CREDIT?

This provision of the Housing Bill is commonly referred to as a tax credit for “first-time home buyers.” But in reality, any buyer that has not owned a home for three years or longer is eligible for the tax credit. For married couples, neither person may have owned their principal residence within the last three years.

 

WHAT ARE THE INCOME LIMITS?

The federal housing tax credit is not targeted strictly at low income home buyers. In fact, the adjusted gross income limit is $75,000 for singles and $150,000 for married couples who file jointly. Additionally, a partial credit is still available for people with incomes that exceed the AGI limits. For singles who make up to $95,000 per year or married couples with a combined income of up to $170,000, there is still an opportunity to receive a tax credit on your new home purchase.

 

HOW LONG WILL THE CREDIT BE AVAILABLE?

The housing tax credit is available to home buyers who purchase a new home between January 1st, 2009 and December 1^st, 2009.  This will surely come as welcome news to first-time buyers who recently purchased a new home without any expectation of receiving a tax credit. Likewise, people who have been on the fence about whether or not to buy now have yet another reason to take advantage of the great market conditions that exist for new buyers. In addition to the new $8,000 housing tax credit, interest rates remain near historically low levels, an abundance of new home inventory is available, and new homes continue to be a great long-term investment. Taking all this into consideration, there has never been a better time to buy a new home than right now.

Although the southern Wisconsin housing market has experienced a slow down during the past 24 months, the effects have been only minor when compared with some of the harder hit markets in the U.S. – or even other Midwestern states such as Indiana, Michigan, Illinois and Minnesota.  The demand for new single-family homes in southern Wisconsin has remained steady and you can bet that the new housing tax credit will help many more people realize their dream of owning a new home.

To begin searching for a new home in Wisconsin or to learn about Brookstone Homes, please visit www.brookstonehomes.com