The housing-relief law passed at the end of last month included a tax credit of up to $7,500 for first-time homebuyers. But -- this has confused people -- it isn't a gift.
It's basically an interest-free government loan that has to be paid back over 15 years (that's $500 a year).
It's not a tax deduction, where your income is reduced by $7,500. It's a tax credit, which means the money is added to the amount you paid in taxes and you get it back dollar for dollar as a tax refund.
And yes, it does have to be paid back -- which is sort of a bummer. But an interest-free loan is nothing to sneeze at, so if you qualify, take the credit. Don't scoff because the money has to be paid back. It's still a freebie.
More Details....
The New Housing Bill passed by Congress for First Time Home Buyers is a Tax Credit/Interest Free Loan which may benefit some "New Home Buyers."
A New Home Buyer is someone who had NO ownership interest in a principal residence (home) during the three year period ending on the date of the current home purchase.
The phase out for this Credit/Interest Free Loan is $75,000 for single taxpayers and $150,000 for married taxpayers.
The phase out of the Credit/Interest Free Loan begins with the taxpayer's Adjusted Gross Income for Single filers at or above $75,000 and for Married filers at or above $150,000. The credit begins to phase out once above the thresholds.
The home must be used by the owner(s) as their Primary Residence.
The timeframe of this Credit/Interest Free Loan for the First Time Home Buyer's Primary Residence purchase begins on or after April 9, 2008 and ends on or before July 1, 2009.
The maximum Credit/Interest Free Loan for the First Time Home Buyer's Primary Residence is worth 10% of the purchase price not to exceed $7500.
The Credit may be split between married couples if they choose to file "separately" with $3750 taken by each taxpayer.
This Credit is really an Interest Free Loan that the government expects to be paid back over a 15 year period. This amounts to $500 per year or approximately $41.67 per month for 180 months.
The Credit/Interest Free Loan begins repayment in the second tax year after you purchased your First Time Home Buyer's Primary Residence.
If the home is sold for some reason before the credit is paid back the total amount is due immediately.
If the home is sold at a gain and the gain is less than the credit, then the remaining payment would be equal to the amount of the gain.
If the homeowner dies before the credit/loan is repaid an outstanding balance is forgiven.
Finally, the bill provides for current home owners who claim the standard deduction with an additional standard deduction for state and local real property taxes.
The maximum amount that may be claimed is $500 for Single filers and $1000 for Joint filers. However this additional deduction applies only to the 2008 tax filing.
If you, or any of your friends, family or co-workers could take advantage of this program, please have them contact Teresa at (580) 467-7355.
Fall home maintenance checklist
· Check all window and door locks for proper operation.
· Check your home for water leaks and repair as necessary.
· Review your fire escape plan with your family.
· Make sure there are working nightlights at the top and bottom of all stairs.
· Have a heating professional check your heating system. Wood burning stove connector pipes and chimneys should be inspected by a certified chimney sweep annually.
· Protect your home from frozen pipes.
· Replace or clean your furnace filter monthly.
· Run all gas-powered lawn equipment until the fuel is gone before storing. This removes flammable liquid storage from your garage. At the same time, make sure you aren't storing dirty, oily rags in a pile; they can ignite spontaneously.
· Test your emergency generator if you have one.
· Have a certified chimney sweep inspect and clean the flues and check your fireplace damper. Soot and creosote, which build up inside the chimney, can ignite when a fire is lit in the fireplace.
· Remove any bird nests from chimney flues and outdoor lighting fixtures as they are a fire hazard.
· Inspect and clean dust from the covers of your smoke and carbon monoxide alarms and replace batteries.
· Re-caulk around doors and windows to reduce heat/cooling loss.
· Check for cracked or missing caulk around the base of your toilet, bathtub, and bathroom cabinets. Properly sealing gaps between your bathroom fixtures and flooring material can prevent damage to the sub-floor.
Contact Teresa Young for ALL your Real Estate needs.
580.467.7355 mobile 580.255.8657 x29 office 1.866.400.4067 fax isellhomes@cableone.net
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