With the deadline for 2008 tax filing approaching, many consumers are questioning how their decision to become a first time homeowner will affect their impending rebates. Over the past few months, there has been talk of a variety of tax credits offered by the Federal Government to spike consumer spending and confidence in the floundering housing market. The amount of money first-time buyers may be entitled to depends primarily on the purchase date of the property.
Homes Purchased between Jan. 1, 2009 and Dec. 1, 2009
Those who purchased a property from January 1 through December 1, 2009 will be able to benefit from a financial tax windfall, courtesy of the American Recovery and Reinvestment Act of 2009. For those properties purchased by first time home-owners, the rules are as follows:
- couples earning no more than $150,000 or
- singles earning no more than $75,000
Will be able to receive a bounty of $8,000 credit (or 10% of the home's value, whichever is less) for their purchase. This claim can be taken on either the homeowners 2008 or 2009 tax filing, and the money will be provided as a full refund regardless of any additional taxes to be paid on income, and the money will not have to be paid back to the Government.
Homes Purchased between Apr. 9, 2008 and Jan. 1, 2009
This tax incentives differs vastly from the $7,500 credit that was offered to first time home buyers who purchased between April 9, 2008 and before January 1, 2009. In July of 2008, another type of home purchasing stimulus strategy was offered by the Bush administration as a way to help prop up the deflating home market. At that time, a one-time $7,500 interest-free loan was offered as an incentive for first time home buyers to actively participate in the restoration of that sinking industry. Unlike the current plan, that money had to be repaid over a fifteen year period. However, the income required to qualify are the same levels as the 2009 stimulus credit.
Both plans offer not only financial benefits to the consumers, but the hope is to stimulate the housing market by encouraging Americans to take a leap of faith and buy their first homes. Dropping mortgage rates in conjunction with government policies were designed to combat the declining housing industry, but thus far have had no measurable effect.
Is this tax incentive enough to make you consider buying a home in this market?
