First Time Home Buyer Tax Credit Expires Soon

by Elizabeth Rozier

Have you ever been given free money? I have. This year I bought my first home and my check is in the mail. That's right, you buy and the government pays. Because of the downward slump in the nationwide housing market over the past couple of years Congress passed a bill in February 2009 to boost the nationwide home sales. Whether you are a fan of the bill or not, there are some tangible benefits to the buyers of 2009: free money for first time homebuyers like myself. There are qualifications, but most first time home buyers qualify for them. Even if you have owned a home previously but not recently, you may get free money. It's better than Christmas. Want to know more details? I can give you the basics, but if you need more detail information you can find it on the sites below.
So, want to know if you qualify?

• 
  
  Income restrictions:
  
  • Single tax payer may earn up to $75,000 (adjusted gross income)
    
  • Married tax payers filing jointly may earn up to $150,000 (adjusted gross income)
    
  The Payoff….how much will you receive:
  
• 10% of the purchase price up to $8000. Ex. If you purchase a $60,000 residence you will receive $6000 back; if you purchase a $150,000 you will receive $8000.
  
•  "First time buyer" status:
• You must not have owned a principle residence in the last three years.
  
• You should still qualify if you owned a home outside of the U.S. in the last three years so long as you did not own one in the U.S.
  
• If you are married both spouses must be a first time home buyer to qualify.
  
• Homes that qualify:
• You must purchase and close on the property between January 1, 2009 and December 1, 2009.
  
• The home must used as a principle residence during the following 3 years (a full 36 month period). If the house is no longer used for principle residence the credit must be repaid in full on that year's tax return.
  
• How do I receive the credit:
• If you purchase the home in the qualified time period, you can still file an amended return for 2008 or you can file with your 2009 return. Either way you will need Form 5404. If you are filing an amended return you will also need form 1040, but it is recommended that you visit the IRS website below for more detailed instructions.

Here are some helpful things to know about buying in general that may affect your ability to qualify.

• With new laws passed in Texas and the U.S. this year it now takes loans 30-45 days on average to process. So, in order to close by December 1 you will need to be under contract no later than October 17, 2009. Yes, that means you need to start looking now.
  
• It can take less than 24 hours to get pre-approved for a loan
  
• Local real estate markets can be very different than nationwide trends so, you may be faced with some competition in certain parts of Texas and even certain parts of Houston. That means you may have to submit a few offers before finding the right one for you.
  
• Good credit is still required but lenders have let out some slack in the restrictions in the last year (as compared to the previous year). They are, however, still being very stringent in their approvals. They only way to know if you are a qualified buyer is to apply or speak with a lender. You might be surprised at what they have to say.
  

Helpful Links:
The Bill: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1enr.pdf
IRS Info: http://www.irs.gov/newsroom/article/0,,id=206291,00.html